BUSINESS  ACCOUNTING 


:Rg^di.ng  "Suide  and 
iilGeneral  Index 


Digitized  by  the  Internet  Archive 

in  2007  with  funding  from 

Microsoft  Corporation 


http://www.archive.org/details/constructiveaccoOObennrich 


BUSINESS  ACCOUNTING 

Harold  Dudley  Greeley,  C.P.A.,  Editor 


Volume  I — Theory  of  Accounts 

By  Harold  Dudley  Greeley 

II — Constructive  Accounting 
By  George  E.  Bennett 

III — Cost  Accounting 

By  DeWitt  Carl  Eggleston 

IV — Advanced  and  Analytical  Accounting 
By  Henry  C.  Cox 

V — Illustrative  Accounting  Problems 
By  Charles  F,  Rittenhouse  and 
Harold  Dudley  Greeley 


Business  Accounting 


READING  GUIDE 


By 
ARTHUR  H.  ROSENKAMPFF,  B.C.S. 

Professor  of  Accounting,  New  York  University 

•      And 

GOULD  L.  HARRIS,  M.A. 

Lecturer  in  Cost  Accounting,  New  York  University 


NEW  YORK 

THE  RONALD  PRESS  COMPANY 

1920 


Copyright,  1920,  by 
The  Ronald  Press  Company 


All  Rights  Reserved 


INTRODUCTION 

The  volumes  of  this  set  are  designed  for  practical 
use.  For  the  man  who  desires  to  obtain  a  working 
knowledge  of  accountancy  but  is  compelled  to  pursue 
his  study  by  himself,  the  five  volumes  constitute  a 
graded  course  of  reading.  If  he  will  begin  with  Vol- 
ume I  and  work  methodically  through  the  series,  he 
will  come  out  with  a  broad  and  trustworthy  grasp  of 
the  principles  of  the  subject,  and  an  acquaintance 
with  a  wide  variety  of  the  points  of  current  practice. 
The  man  who  has  already  a  knowledge  of  accounting 
will  find  in  these  volumes  a  compact  and  convenient 
presentation  of  the  entire  subject,  eminently  worthy 
of  frequent  reference. 

In  using  the  set  for  reference  purposes  the  reader 
will  naturally  turn  first  to  the  General  Index  in  this 
volume.  He  is  urged  to  read  over  carefully  the  sug- 
gestions on  pages  135  to  138  regarding  ways  of 
using  the  index.  This  Reading  Guide,  moreover, 
briefly  directing  attention  to  outlining  the  high  spots 
of  all  the  volumes,  will  prove  a  useful  supplement  to 
the  index,  by  enabling  the  reader  to  check  his  imme- 
diate  recollections  as  to  the  importance  and  the  fuU 
range  of  points  involved  in  a  specific  problem. 

Knowledge  of  accountancy  is  virtually  a  necessity 
for  any  business  man  doing  important  work,  not 
merely  because  of  its  immediate  information  value  in 
handling  business  details,  but  as  a  prerequisite  for 

a 

425514 


4  INrROpUCTION 

any'  reliable  command  of*  organization  and  manage- 
ment. It  is  the  only  way  in  which  one  can  tell  what  a 
business  is  really  doing. 

Though  a  man  may  never  have  occasion  to  draw 
up  a  consolidated  balance  sheet,  yet  he  may  want  to 
invest  in  the  stock  of  a  corporation  which  belongs  to 
a  consolidation  and  therefore  he  will  need  to  under- 
stand its  financial  statements.  His  business  may  not 
be  a  manufacturing  one  and  perhaps  he  can  see  little 
or  no  use  in  the  study  of  cost  accounting,  j^et  the 
theory  of  the  subject  is  applicable  to  every  type  of 
business,  and  excess  profits  taxes  and  other  forms  of 
taxation  are  making  the  application  of  this  theory 
more  and  more  necessary  in  every  mercantile  con- 
cern. He  may  think  the  subject  of  annuities  too 
complicated  to  worry  over,  but  he  cannot  intelligently 
compare  the  relative  merits  of  sinking  fund  or  other 
methods  of  liquidating  bonded  debt  without  under- 
standing the  principles  on  which  annuity  computa- 
tions are  based.  There  is  hardly  a  business  day  in 
which  he  will  not  find  use  for  a  knowledge  of  accounts. 

Another  fact  comes  more  plainly  to  the  front  as 
business  takes  on  increasingly  the  intensity  of  pro- 
fessional work,  namely:  the  value  of  the  study  of 
accountancy  in  developing  mental  power.  The  close 
analysis  of  business  situations  and  problems  which  it 
necessitates  develops  to  an  unusual  degree  the  sense 
of  logic — the  power  both  of  analyzing  facts  and  of 
thinking  constructively.  It  is  not  too  much  to  say 
that  the  business  man  trained  to  the  ready  use  of 


INTRODUCTION  g 

accounting  methods  has  an  entirely  different  class  of 
brain  power  on  account  of  that  ability. 

Professional  mastery  of  accounting  comes  only 
with  practice.  But  the  accountancy  attitude  of  mind 
can  be  developed  to  a  very  considerable  degree 
through  systematic  study,  even  without  an  instructor, 
and  at  home.  Accountancy  in  this  respect  is  unlike 
the  sciences  which  deal  with  physical  things — medi- 
cine, engineering,  chemistry — and  somewhat  re- 
sembles law.  Many  an  obscure  law  student  has 
gradually  acquired,  by  sticking  at  it  night  after  night, 
a  grasp  of  legal  principles  and  a  familiarity  with 
important  rulings  which  greatly  expedited  his  mas- 
tery of  the  technique  of  actual  practice.  The  busi- 
ness man,  similarly,  can  acquire  a  sound  understand- 
ing of  accounting  principles  and  a  wide  acquaintance 
with  the  subject  through  systematic  reading  of  the 
volumes  of  this  set. 

The  business  man  has  this  advantage  besides, 
over  the  lonely  law  student :  that  the  circumstances  of 
his  own  business  afford  constant  occasion  to  test  his 
grasp  of  theory  by  applying  it  to  the  changing  facts 
of  life. 

A  good  many  persons,  when  they  take  up  an 
accounting  book,  try  to  do  their  studying  in  the 
wrong  way,  and  as  a  result  think  the  subject  far  more 
difficult  than  it  is.  Memory  alone  will  not  carry  one 
far  with  a  subject  such  as  accounting,  involving  mani- 
fold detail;  he  must  from  the  first  put  some  of  the 
load   upon   his   powers   of   analysis   and   judgment. 


5  INTRODUCTION 

When  one  istudies  any  subject  mechanically,  trying 
merely  to  learn  what  is  done,  without  knowing  why 
it  is  done  in  this  way  or  that,  the  effort  soon  becomes 
wearisome.  Learning  accounting  item  by  item,  by 
memory  only,  would  be  a  difficult  and  indeed  an  end- 
less task. 

But  when  a  student  understands  reasons,  and 
recognizes  the  connection  between  the  knowledge  thus 
acquired  and  the  improved  operation  of  his  business, 
the  study  of  accounting  becomes  interesting.  The 
larger  and  more  firm  the  grasp  of  its  principles,  the 
more  interesting  and  fascinating  its  study  becomes. 
The  requisite  for  sustaining  an  interest  in  these  vol- 
umes is  to  try  to  understand.  The  Reading  Guide, 
prepared  in  the  light  of  extensive  experience  in  teach- 
ing business  men,  is  designed  to  help  the  reader  to 
grasp  the  reason  behind  accounting  procedure. 

In  its  preparation,  the  functions  of  a  guide — 
serviceableness  and  unobtrusiveness — have  been  kept 
in  mind  throughout.  It  is  to  facilitate  the  reader's 
journey,  not  to  offer  him  a  quick  and  easy  substitute 
for  his  own  effort.  Effort,  active  and  persistent,  is 
essential  if  he  is  to  reach  his  journey's  end;  the  sug- 
gestions in  the  Guide,  like  the  comments  of  a  skilled 
and  sympathetic  instructor,  will  aid  the  reader  to 
apply  his  effort  to  best  advantage. 

]yiastery  of  a  subject  which  deals  with  an  extended 
and  complex  field  of  knowledge  can  never  be  acquired 
quickly.  The  factor  of  time  is  of  prime  importance. 
The  reader  must  be  prepared  to  make  haste  slowly. 


INTRODUCTION  ^ 

Accounting  practice  has  taken  several  hundred  years 
to  develop.  Its  principles,  with  the  exception  of 
occasional  changes  due  to  legal  rulings,  remain  the 
same,  but  year  by  year  its  details  grow  in  complexity 
as  business  grows  in  size.  No  matter  what  may  be 
the  reader's  powers  of  concentration,  the  information 
in  these  volumes  cannot  be  gained  by  sudden  assault. 
It  calls  for  a  long  succession  of  short  attacks,  each 
of  them  followed  by  digging  in  and  consohdating  the 
position  won.  Only  by  really  assimilating  what  has 
been  studied,  lesson  by  lesson,  can  genuine  advance  be 
made. 

From  the  very  first  day  the  reader  will  find  his 
new  knowledge  of  value,  but  there  is  enough  informa- 
tion in  these  volumes  to  occupy  his  attention  for  two 
years  of  quiet  and  steady  work. 

Now  the  man  who  must  do  his  work  alone  finds 
difficulty  always  in  holding  himself  down  to  such 
gradual  procedure.  For  one  thing,  it  is  hard  for  him 
to  work  at  an  even  pace.  At  times,  when  the  subject 
becomes  especially  interesting,  he  hurries  on  over 
many  pages.  What  he  reads  may  seem  so  clear  at 
the  moment  that  he  fails  to  pause  often  enough,  to 
test  by  sober  reviewing  how  much  he  has  actually 
grasped — so  that  he  could  use  the  procedure  in 
further  work.  Or,  perhaps  the  going  is  heavy,  deal- 
ing with  many  matters  that  are  difficult  to  grasp. 
Nevertheless,  as  he  catches  a  glimpse  of  something 
further  on  that  is  interesting  and  appears  clearly  in- 
telligible, he  pushes  along  in  the  hope  that  when  he 


g  INTRODUCTION 

reaches  that  hill-top  tbe  intermediate  road  will  clear 
itself  up  for  him.  In  either  case  he  is  pretty  sure 
somewhere  and  unexpectedly  to  find  his  progress 
blocked.  Back  in  those  pages  he  has  skimmed  are 
processes  which  are  indispensable  for  any  further 
advance. 

On  the  other  hand,  the  conscientious  reader  who 
works  alone  may  apply  his  energy  uneconomically. 
He  may  go  too  slowly  at  first,  and  waste  time  in 
memorizing  matter  which  is  merely  preliminary  to 
the  points  of  real  importance,  and  which  requires  only 
a  quick,  general  reading.  After  a  while  he  finds  that 
the  study  pursued  in  this  way  involves  more  time  and 
energy. than  he  can  justifiably  take  from  his  other 
duties,  and  he  feels  compelled,  however  regretfully, 
to  drop  it. 

The  Reading  Guide,  like  the  comments  of  a 
trained  instructor,  can  help  the  reader  to  distribute 
his  effort  wisely. 

1.  The  reader  can  learn  from  the  suggestions 
here  given  when  to  spurt  and  when  to  go  slowly; 
when  to  read  cursorily  and  when  to  get  down  and 
grind ;  when  to  work  for  exact  information  and  when 
for  merely  general  comprehension  of  a  matter;  when 
to  stop  and  digest  what  he  has  been  reading,  to  fix 
it  in  mind  by  means  of  original  observation  and  ex- 
periment. 

2.  In  the  study  of  an  extended  subject  the  rela- 
tionships among  items  apparently  unconnected  are 
of  great  significance.     The  parallels  and  cross-refer- 


INTRODUCTION  g 

ences  in  the  Guide  call  the  reader's  attention  to  such 
relationships  and  enable  him  thus  to  build  properly 
together  the  various  divisions  of  the  subject  as  the 
successive  volumes  develop  them. 

3.  One  notable  service  of  an  instructor  consists 
in  interpreting  and  reinforcing  the  matter  of  the  text 
as  occasion  requires,  presenting  it  in  various  lights 
according  to  the  varying  need  of  the  student.  Some- 
thing of  what  the  experienced  instructor  can  do  in 
this  way  is  done  by  means  of  the  Reading  Guide.  The 
text  itself  must  present  the  subject  in  logical  per- 
spective, and  on  a  substantially  uniform  scale.  The 
Guide  can  single  out  for  special  attention  passages 
that  offer  to  the  student  some  special  difficulty  on 
first  approach,  and  illuminate  them  with  paraphrase 
or  comment. 

4.  The  Guide  aids  the  reader  to  break  up  his  task 
into  divisions  that  are  roughly  equivalent  in  extent 
and  not  too  large,  and  that  are  grouped  partly  ac- 
cording to  the  logical  lines  of  the  subject,  partly 
according  to  convenience  of  handling  under  the  con- 
ditions. In  this  respect  it  does  for  him  something  of 
what  is  done  for  members  of  a  class  by  the  successive 
lesson-assignments  of  the  teacher. 

5.  Similarly,  and  what  is  perhaps  most  important 
of  all,  the  Reading  Guide  can  furnish  to  the  individual 
working  alone  a  method  of  comparing  his  progress 
with  what  is  expected  of  other  students  by  teachers  of 
long  experience.  It  enables  him  to  a  degree  to  meas- 
ure his   own   powers   and  standards  of   attainment 


jQ  •       INTRODUCTION 

against  those  of  other  men.    He  will  be  less  prone  to 
either  discouragement  or  slackness. 

Here  may  be  added  one  or  two  general  sugges- 
tions of  very  practical  nature.  Emphasis  has  been 
laid  upon  the  need  of  assimilating  each  successive 
point  before  proceeding  further.  The  best  way  to 
insure  this  is  to  combine  the  study  of  theory  with 
practical  work.  For  the  business  man,  it  may  be  suffi- 
cient to  carry  through  mentally  the  practical  applica- 
tion of  theory.  For  the  bookkeeper,  it  will  be  neces- 
sary actually  to  perform  the  operations  in  question 
over  and  over  again  until  both  theory  and  practice 
are  firmly  fixed  in  mind.  Suggestions  as  to  the  kind 
of  practical  work  to  be  done  are  given  in  connection 
with  the  individual  assignments  of  the  work  in  each 
volume. 

The  test  as  to  the  thoroughness  of  a  reader's  grasp 
of  the  subject  is  simple.  Can  he  answer  readily  the 
review  questions  at  the  end  of  each  chapter?  If  so, 
he  is  ready  to  pass  on.  If  not,  his  knowledge  is  hazy 
and  indefinite;  it  will  lead  to  mental  confusion.  Ex- 
perience in  instructing  has  shown  that  the  difficulties 
of  the  student  are  largely  of  his  own  making;  they 
come  from  his  overlooking  or  forgetting  an  important 
iiile  of  theory  or  principle.  When  the  transaction 
turns  up  to  which  the  theory  applies  and  the  need 
comes  for  making  the  correct  records  on  the  books, 
the  student  is  nonplused. 

Therefore,  if  the  reader  finds  in  any  instance  that 
he  cannot  readily  answer  the  review  questions,  let  him 


INTRODUCTION  jj 

go  over  the  chapter  to  which  they  refer  and  study  it 
carefully  until  he  can  answer  them. 

Another  suggestion  is  this:  Make  a  practice  of 
checking  with  a  pencil  in  the  margins  as  you  read, 
those  paragraphs  or  sections  which  contain  important 
principles  or  rules  of  procedure  and  which  for  this 
reason  should  be  memorized. 

It  is  not  sufficient  merely  to  understand  a  prin- 
ciple or  see  through  a  theory.  There  is  hardly  any- 
thing in  Volumes  I  to  IV  of  this  series  which  cannot 
be  understood  at  least  on  the  second  or  third  reading. 
But  the  rule  or  principle  must  be  remembered  defi- 
nitely, when  needed,  together  with  the  method  of  its 
application.  Unless  one's  knowledge  is  ready  at 
hand,  he  will  never  be  able  to  handle  difficult  or  com- 
plicated transactions.  If  knowledge  is  to  be  of  prac- 
tical value,  the  reader  needs  so  to  master  the  theory 
of  accounts,  so  to  fix  the  theory  of  the  subject  in  mind, 
that  he  can  recognize  quickly  and  surely  the  transac- 
tions to  which  a  particular  point  of  theory  is  appli- 
cable. 

A  good  deal  of  the  theory  of  accounts  is  simple 
and  self-evident  and  no  one  will  have  much  difficulty 
in  mastering  it  and  memorizing  it.  This  will  usually 
be  the  case  when  the  explanation  is  easily  grasped  at 
the  first  reading.  But  if  anything  is  at  all  difficult  to 
understand,  if  it  requires  two  or  three  or  four  read- 
ings, the  reader  should  check  that  paragraph  in  the 
margin  with  his  pencil.  He  should  make  it  a  firm 
rule,  before  taking  up  a  fresh  assignment  of  work,  to 


J  2  INTRODUCTION 

go  over  all  the  marked  paragraphs  and  formulate  ii 
his  own  mind  their  contents,  taking  his  cue  from  th( 
section  head  or  the  opening  sentence. 

If  the  reader  can  readily  and  accurately  recall  th( 
first  of  any  marked  paragraph,  he  may  safely  rub  ou 
the  pencil  mark  in  the  margin.  But  if  he  cannot,  th( 
pencil  mark  should  be  left  in  the  book — and  th( 
marked  paragraphs  should  be  read  again  and  again 
until  at  last  their  contents  have  been  mastered.  Th 
suggested  procedure  may  sound  irksome,  but  this,  o: 
something  like  it,  is  the  only  condition  of  sure  anc 
ready  command  of  the  subject. 

Having  mastered  the  theory  and  faithfully 
worked  through  the  illustrative  practice  material  ii 
Volimies  I  to  IV>  the  reader  should  by  all  means  tes 
the  acuteness  and  thoroughness  of  his  work  by  sys 
tematically  applying  the  theory  which  he  has  beer 
studying  to  the  problems  of  Volume  V.  Some  of  the 
more  simple  of  these  may  be  taken  up  concurrentlj 
with  the  study  of  the  theory  to  which  they  refer,  ir 
Volumes  I  to  IV,  as  suggested  in  various  assign- 
ments to  those  volumes.  The  greater  number,  how- 
ever, are  of  the  nature  of  general  review  and  tesi 
material,  designed  to  try  the  reader's  ingenuity  and 
resourcefulness.  They  are  most  important  labora- 
tory material. 

No  one  should  be  discouraged  if  he  cannot  solve 
these  problems  at  the  first  attempt.  They  have  been 
selected  not  as  being  easy  to  solve — nor  yet  as  being 
difficult — but    as    illustrating    fairly    the    problems 


INTRODUCTION  18 

which  actually  present  themselves  in  the  course  of 
business.  Many  of  these  problems  have  been  set  for 
C.  P.  A.  examinations,  which  test  the  candidate's 
power  of  hard,  analytical  thinking  as  well  as  his  prac- 
tical sense  of  business  values.  Without  a  knowledge 
of  accounting,  the  business  man,  when  such  a  prob- 
lem develops  in  his  own  business,  can  do  nothing  but 
blindly  guess,  or  blindly  trust  the  advice  of  some  other 
person.  On  the  other  hand,  the  business  man  who  has 
worked  through  the  volumes  of  this  series  should 
possess  the  knowledge  to  enable  him  to  face  such  an 
emergency  with  clear  understanding.  But  the  more 
diligently  he  has  ''shaken  down"  his  knowledge  of 
theory  by  the  practical  applications  in  which  this  vol- 
ume of  problems  exercise  him,  the  quicker  and  prob- 
ably the  more  sure  will  be  his  diagnosis  of  actual  situa- 
tions. 

It  need  hardly  be  said  that  the  suggestions  of  this 
Guide  are  not  offered  as  in  any  sense  authoritative 
directions.  Many  men  will  strike  out  for  themselves 
other  ways  of  proceeding,  better  suiting  their  own 
needs.  Others  perhaps  will  find  in  the  Guide  one  or 
two  features  only  which  they  desire  to  apply  to  their 
own  case.  On  the  other  hand,  however,  a  large  num- 
ber of  readers  will  doubtless  find  it  a  distinct  con- 
venience to  have  set  down  for  them  a  map  of  the 
road,  worked  out  to  suit  the  ordinarily  intelligent  man 
and  taking  into  account  the  limitations  of  time  and 
energy  imposed  by  a  business  position  of  average 
responsibility. 


14  INTRODUCTION 

One  last  admonition.  By  far  the  most  important 
factor  in  mastering  any  subject — more  important  even 
than  acuteness  of  first  perception,  or  vivid  realization 
of  background,  or  orderliness  of  logical  development 
— ^is  frequent  and  painstaking  review.  Therefore, 
after  one  has  worked  through  the  volumes  of  the  set, 
making  use  of  such  aid  as  this  Guide  affords,  he 
should  by  all  means  come  back  and  read  the  Gvide 
again.  In  this  swift  review,  if  here  and  there  a  point 
is  still  hazy,  let  him  turn  back  once  more  to  the  text 
and  chnch  the  point.  Running  over  the  Guide  now 
and  then  will  do  much  to  keep  the  whole  field  of  ac- 
counting procedure  clear  in  recollection. 


Reading  Guide 

Volume  I 
Theory  of  Accounts 


ASSIGNMENTS  FOR  VOLUME  I 

For  the  reader  who  desires  to  take  up  the  subject 
carefully,  the  division  of  each  volume  of  this  series 
into  working  sections  or  ''tasks"  of  convenient  size  is 
most  desirable.  The  man  working  alone  may  thus 
have  some  indication  of  the  scale  by  which  to  measure 
his  own  rate  of  progress. 

To  some  extent  the  grouping  into  parts  and  chap- 
ters followed  in  the  text  facilitates  such  a  division, 
but,  as  has  been  noted  already,  that  grouping  is  de- 
termined primarily  by  considerations  of  logic.  The 
fact  that  a  certain  chapter  actually  requires  much 
more  time  on  the  part  of  the  student  than  do  others 
of  equal  length  would  hardly  be  revealed  by  the  table 
of  contents,  nor  yet  that  certain  chapters  are  grasped 
.more  easily  if  taken  up  in  connection  with  others  in 
a  quick  preliminary  survey.  Such  information  is 
given  in  the  Guide.  The  assignments  here  given  not 
only  set  up  ''red  arrows"  at  points  where  there  is  dan- 
ger of  losing  the  way,  but  they  indicate  also  the  more 
convenient  stopping  places  where  the  traveler  may 
break  his  journey. 

The  circumstances  of  the  readers  of  these  volumes 
are  widely  various,  and  no  less  various  is  the  amount 
of  time  which  each  man  can  allow  day  by  day  for  bis 
reading.  The  assignments  must  be  adjusted  to  the 
actual  convenience  of  the  average  reader.  It  is  a  fair 
assumption,  however,  that  close  and  careful  readuig 

17 


18  READING  GUIDE 

of  any  volume  of  this  series  will  occupy  the  man  of 
average  position,  who  has  the  average  number  of  calls 
upon  his  time,  from  three  to  five  months — hardly  less, 
at  any  rate,  than  thirteen  or  fourteen  weeks. 

Allowing  for  vacation  time  and  the  inevitable  in- 
terruptions to  which  a  busy  man  is  subject,  he  might 
fairly  expect  to  complete  the  five  volumes  in  from  a 
year  and  a  half  to  two  years.  For  each  of  the  first 
four  volumes,  accordingly,  from  twelve  to  fourteen 
assignments  have  been  drawn  up,  each  assignment — 
with  the  practice  work  or  problems  connected  with  it 
— calculated  to  require  about  a  week's  work.  For 
the  problems  in  Volume  V  such  grouping  into  defi- 
nite assignments  is  hardly  possible,  but  the  volume 
would  require,  if  the  reader  works  carefully,  at  least 
as  much  time  as  any  of  the  others. 

Each  assignment,  therefore,  may  be  taken  as  rep- 
resenting on  the  average  a  week's  work.  Many  men 
may  find  it  convenient  to  work  faster,  but  in  plan- 
ning the  whole  series  of  assignments  it  seemed  best  to 
set  a  pace  such  as  a  man  actively  engaged  in  business 
might  fairly  hope  to  maintain. 


Assignment  1 
PRELIMINARY  EXPLANATION 

The  three  chapters  with  which  this  book  opens 
contain  information  of  a  general  character,  a  knowl- 


BUSINESS  ACCOUNTING— VOLUME  I  jg 

edge  of  which  must  precede  the  study  of  accounting 
in  general  and  the  theory  of  double  entry  in  par- 
ticular. 

Modern  Accountancy  (Chapter  I) 

The  matter  in  this  chapter  is  introductory  and  requires 
merely  careful  reading. 

Preliminary  Information  (Chapter  II) 

To  the  business  man  or  the  bookkeeper  employed  by  a  busi- 
ness house,  the  contents  of  this  chapter  will  seem  elementary. 
If  you  know  the  definitions,  that  is,  if  there  is  no  doubt  in  your 
mind  as  to  the  meaning  of  the  terms  used,  you  can  pass  to  the 
next  chapter  after  a  careful  reading.  If  the  study  of  account- 
ing is  a  wholly  new  subject,  master  the  definitions  and  pay  par- 
ticular attention  to   §§9  and   10. 

Capital  (Chapter  III) 

The  same  observations  apply  to  this  chapter  as  to  Chapter 
II.  Sections  8  and  9  should  be  studied  closely  and  reread  sev- 
eral times.  If  you  can  give  the  definitions  accurately  in  answer 
to  the  review  questions,  you  may  assume  a  knowledge  of  the 
contents  of  this  and  the  preceding  chapter.  But  if  you  cannot 
define  them  readily  and  accurately,  study  them  until  you  can. 


Assignment  2 
THE  THEORY  OF  DOUBLE  ENTRY 

The  three  chapters  in  this  division  of  work  cover 
the  theory  on  which  the  principle  of  double  entry  is 


2Q  READING  GUIDE 

based.  Here  the  emphasis  begins  to  be  placed  on 
practice  work  as  shown  by  the  exercises  and  prob- 
lems in  the  text  and  at  the  end  of  each  chapter. 

Double-Entry  Bookkeeping  (Chapter  IV) 

Full  command  of  the  theory  of  double-entry  bookkeeping 
comes  witli  continued  study  and  practice  work.  Here  the  sub- 
ject is  presented  only  in  its  simpler  aspects.  The  transactions 
discussed  are  the  more  simple  ones,  the  debiting  and  crediting 
of  wliich  do  not  present  any  difficulty  when  the  general  theory 
is  grasped.  Do  not  fail  to  do  the  practical  work  called  for  in 
Review  Questions  2,  6,  and  7. 

Determination  of  Capital  (Chapter  V) 

The  discussion  in  §§  1  to  3  is  fairly  simple;  in  §§4,  5,  and  6 
it  is  more  difficult  to  grasp.  These  three  sections  are  particularly 
important.  The  points  they  present  need  to  be  closely  studied 
and  memorized.  Work  out  answers  to  the  review  questions  and 
compare  with  tlie  text.     Rewrite  when  necessary. 

As  noted  in  the  introduction  to  this  book,  there  is  nothing 
inherently  difficult  in  the  study  of  accounting.  Doubts,  per- 
plexities, and  difficulties  arise  only  where  the  theory  of  the  sub- 
ject has  not  been  understood  or  has  been  inadequately  mastered. 
Concerning  few  other  subjects  is  a  "smattering'*  of  information 
more  dangerous  and  in  the  study  of  few  other  subjects  does 
thoroughness  pay  larger  dividends  than  in  the  study  of  account- 
ancy. The  student  of  bookkeeping  is  sometimes  puzzled  as  to 
why  an  expense  account  should  be  debited,  in  view  of  the  fact 
that  an  expense  is  the  reverse  of  an  asset  and  represents  either 
cash  paid  or  to  be  paid  at  some  future  date.  It  is  precisely 
because  the  asset  cash  must  be  credited  when  payment  is  made 
that  an  expense  account  must  be  debited.  If  the  payment  were 
made   to    a    creditor    of    the    business,   that    creditor    would   be 


BUSINESS  ACCOUNTING— VOLUME  I 


21 


debited.  If  the  payment  is  made  for  expenses,  such  as  salaries, 
postage,  gas,  office  supplies,  and  so  on,  these  impersonal  accounts 
must  be  debited  to  show  for  what  purpose  the  money  has  been 
spent,  that  is,  for  what  purpose  the  asset  cash  has  been  with- 
drawn from  the  business.  An  expense  account,  therefore,  has  a 
debit  balance. 

An  income  account,  such  as  Sales,  must  always  have  a  credit 
balance  for  a  similar  reason.  When  a  sale  is  made,  cash  is  re- 
ceived or  the  vendee's  promise  to  pay  cash  to  us  at  a  future  date 
is  accepted  in  lieu  of  cash.  If  the  sale  is  on  credit,  the  cus- 
tomer's account  is  debited  and  Sales  account  is  credited  as  below: 


Dr. 

J.  Smith 

Cr. 

19- 

Jan.  5  Sales 

Dr. 

$1,000.00 

Sales 

Cr, 

19- 
Jan.   5.   J.   Smith 

....$1,000.00 

When  the  customer  pays  us  and  his  indebtedness  disappears. 
Cash  account  is  debited  and  J.  Smith's  account  is  credited. 
Thus,  when  the  sale  is  finally  paid  for,  J.  Smith's  account  bal- 
ances, and  two  entries  remain — a  credit  in  Sales  account  as 
above  and  the  off-setting  debit  in  Cash  account. 

The  principle  of  double  entry  or  the  reason  why  two  entries 
are  made  for  each  transaction  is  usually  a  difficult  matter  for 
the  beginner  to  understand.  It  is  helpful  to  compare  double- 
entry  bookkeeping  with  a  balance  scale  the  two  sides  of  which 
must  be  kept  in  balance  at  all  times. 

Let  us  assume  for  the  purpose  of  illustration  that  O.  Bliss 
begins  business  with  assets  amounting  to  $10,000,  consisting  of 
$8,000  in  cash  and  $2,000  in  merchandise;  that  his  liabilities, 
i.e.,  debts,  amount  to  $2,000  due  A.  Brown  on  open  account  for 
merchandise  purchased;  and  that  his  capital  amounts  to  $8,000. 


22 


READING   GUIDE 


The   elements,   expressed  in   the   form   of   an  equation,    are    as 
follows : 

Assets           equals  Liabilities          plus             Capital 

$10,000               =  $2,000               +               $8,000 

and  the  debits  on  the  left  equal  the  credits  on  the  right. 

Expressed  in  account  form,  we  have: 

Cash  A.  Brown 


$8,000.00     I  $2,000.00 

Merchandise  O.   Bliss,   Capital 


$2,000.00     I  $8,000.00 

Note  that  the  debits  are  equal  in  amount  to  the  credits. 

As  a  result  of  business  transactions  the  amounts  of  these 
three  elements,  viz.,  assets,  liabilities,  and  capital,  are  con- 
stantly changing.  The  assets  either  increase  or  decrease,  and  the 
liabilities  and  capital  likewise  either  increase  or  decrease.  These 
changes  should  be  recorded  in  the  accounts  by  means  of  entries 
made  in  accordance  with  the  rules  for  journalizing  given  on 
page  176  of  Volume  I.  The  reader  should  have  these  rules 
before  him  when  studying  the  following  paragraphs. 

Let  us  now  assume  that  we  purchase  $1,000  worth  of  mer- 
chandise for  cash.  The  twofold  effect  of  this  transaction,  ex- 
pressed in  account  form,  is  as  follows; 

Merchandise  Cash 


$1,000.00  I  $1,000.00 


Merchandise  must  be  debited  with  $1,000  because  the  asset 
merchandise  is  increased  by  that  amount.  Cash  must  be  credited 
with  $1,000  because  the  asset  cash  is  decreased  by  that  amount. 


A 
BUwSINESS  ACCOUNTING— VOLUME  I  28 

By  debiting  Merchandise  we  are  recording  an  increase  in  assets; 
by  crediting  Cash  we  are  recording  a  decrease  in  assets. 

Let  us  further  assume  that  we  purchase  $2,000  worth  of 
merchandise  from  H.  Jenkins  on  account.  This  requires  the 
following  entry: 

Merchandise  H.  Jenkins 


^,000.00  I  $2,000.00 

Merchandise  must  be  debited  with  $2,000  because  the  asset 
merchandise  is  increased  by  that  amount.  H.  Jenkins  must  be 
credited  with  $2,000,  because  we  have  incurred  a  liability  to  that 
extent.  By  debiting  Merchandise  we  are  recording  an  increase 
in  assets;  by  crediting  H.  Jenkins  we  are  recording  an  increase 
in  liabilities. 

If  we  pay  H.  Jenkins  $1,000  on  account,  the  twofold  eflfect, 
expressed  in  account  form,  is  as  follows: 

H.  Jenkins  Cash 


(1)...  $1,000.00    I    Bal...  $2,000.00  I      (1). .  .$1,000.00 

Note  that  the  numbers  in  parentheses  in  the  above  illustration 
indicate  the  double-entry  made.  The  account  of  H.  Jenkins 
must  be  debited  to  record  the  decrease  in  liabilities,  and  Cash 
account  must  be  credited  to  record  the  decrease  in  the  asset 
cash. 

If  we  pay  $10  for  telephone  services  we  have  incurred  an 
expense,  and,  since  all  expenses  are  borne  by  the  proprietor,  it 
follows  that  his  account  must  be  debited.  The  twofold  effect 
of  this  transaction  may  be  expressed  in  account  form  as  follow  a: 

O.   Bliss,   Capital  Cash 

$10.00    I  I  >io-«> 

1 


24  READING  GUIDE 

As  a  result  of  paying  $10  for  services  received  by  the  business, 
the  capital  invested  by  the  proprietor  has  been  decreased.  This 
decrease  in  capital  is  recorded  by  debiting  the  proprietor's 
account  and,  since  the  payment  of  $10  has  decreased  the  amount 
of  the  asset  cash,  it  follows  that  the  Cash  account  must  be 
credited. 

As  explained  in  the  text  on  page  59,  expenses  and  income  of 
a  business,  instead  of  being  charged  and  credited  directly  to  the 
Capital  account,  are  more  conveniently  recorded  in  temporary 
accounts  known  as  expense  and  income  accounts.  Thus,  in 
recording  the  foregoing  transactions  in  practice,  the  twofold 
effect  expressed  in  account  form  would  be  as  follows: 

Expense  Cash 


$10.00     I  $10.00 

The  Expense  account  must  be  debited  to  record  the  temporary 
decrease  in  capital,  and  the  Cash  account  must  be  credited  to 
record  the  decrease  in  the  asset  cash. 

For  the  purpose  of  illustrating  an  item  of  income,  let  us 
assume  that  the  ba::k  allows  us  $20  interest  on  our  bank  bal- 
ance. The  twofold  effect  of  this  transaction,  expressed  in  terms 
of  assets,  liabilities,  and  capital,  is  an  increase  in  the  asset  cash 
of  $20  and  a  corresponding  increase  in  capital  of  $20.  As 
explained,  the  expenses  and  the  income  in  practice  are  not 
debited  and  credited  directly  to  the  Capital  account,  but  instead 
are  debited  and  credited  to  temporary  accounts  known  as  ex- 
pense and  income  accounts.  Therefore,  the  twofold  effect  of  the 
foregoing  transaction  expressed  in  account  form,  as  it  would  be 
recorded  in  practice,  is  as  follows: 

Cash  Interest   Earned 

$20.00     I  I  $20.00 


BUSINESS  ACCOUNTING— VOLUME  I  25 

We  have  now  illustrated  transactions  which  result  in  an  in- 
crease and  decrease  in  each  of  the  three  elements,  viz.,  assets, 
liabilities,  and  capital. 

The  Merchandise  account  is  not  a  pure  asset  account  as  the 
reader  may  have  been  led  to  believe  from  the  foregoing  illus- 
trations and  explanations.  The  treatment  of  this  account  is  fully 
explained,  however,  on  pages  80  and  81  of  the  text.  The  ulti- 
mate disposition  of  the  temporary  accounts,  i.e.,  the  expense  and 
income  accounts,  is  explained  in  the  text  on  page  52. 

Classification  of  Ledger  Accounts  (Chapter  VI) 

Though  belonging  to  Part  II,  this  chapter  is  included  in  this 
assignment  of  work  because  it  rounds  out  the  theory  of  debit 
and  credit.  Its  contents  require  careful  study.  Section  7  should 
be  read  and  reread  until  the  principle  involved  in  classification 
is  thoroughly  impressed  on  the  mind.  When  once  the  purpose 
of  the  asset,  liability,  and  proprietorship  or  capital  accounts 
which  appear  on  the  balance  sheet,  as  well  as  of  the  expense  and 
income  accounts  which  appear  on  the  profit  and  loss  statement,  is 
clearly  grasped,  you  will  have  no  further  difficulty  in  solving 
the  problems  of  "when  to  debit"  and  **when  to  credit." 

From  the  student's  point  of  view,  the  correct  classification  of 
business  transactions  under  appropriate  account  titles  is  the  first 
step  in  determining  the  correct  debit  and  credit.  From  the  book- 
keeper's point  of  view,  the  classification  of  accounts  is  necessary 
as  a  means  of  reducing  the  risk  of  error  in  posting  to  the  ledger. 
From  the  aspect  of  management  and  financial  control,  the  classi- 
fication aids  in  the  preparation  of  financial  statements  and  in- 
sures correctness  of  the  groupings  of  accounts   shown  tliereon. 

In  the  study  of  this  chapter  the  student  is  advised  to  look 
up  the  chapters  referred  to  in  the  text  and  read  the  matter 
therein  given  which  bears  upon  the  particular  point  in  Chapter 
VI.  The  bookkeeping  in  connection  with  recording  of  deferred 
and  accrued  items  always  presents  a  difficulty  to  the  beginner. 
For  further  information  see  Volume  IV,  Chapters  H  and  III. 


26  READING  GUIDE 

Assignment  3 
CLOSING  THE  BOOKS 

MucK  the  most  responsible  and  intricate  work  of 
the  accountant  is  that  of  closing  the  books  prepara- 
tory to  ascertaining  the  profit  or  loss  made  during  a 
period,  and  the  financial  condition  at  the  end  of  the 
period.  The  theory  of  the  subject  is  covered  in  the 
two  following  chapters  in  broad  outline,  leaving  for 
detailed  discussion  in  Volume  IV  the  difficulties  and 
problems  which  arise  when  the  attempt  is  made  to 
determine  profits. 

The  Trial  Balance  (Chapter  VII) 

No  accounting  theory  is  involved  in  the  discussion  in  this 
chapter.  The  taking  of  a  trial  balance  is  a  convenient  method 
of  saving  clerical  labor.  It  should,  of  course,  be  possible  to 
insure  the  accuracy  of  the  postings  and  account  totals  by 
checking  and  rechecking  the  figures,  until  positive  assurance  was 
obtained  that  the  entries  were  correct  as  to  both  mathematical 
calculations  and  position;  but  to  do  this  would  entail  more  labor 
than  to  take  a  periodical  trial  balance.  Assuming  that  post- 
ings and  additions  are  carefully  made,  a  trial  balance  agrees  in 
nine  cases  out  of  ten.  Methods  of  locating  errors,  when  the  two 
totals  fail  to  agree,  are  discussed  in  Volume  IV,  Chapter  XXXI. 
That  chapter  may  well  be  read  in  connection  with  the  present 
discussion. 

Determination  of  Profit  or  Loss  (Chapter  VIII) 

In  this  chapter  is  described  the  method  of  determining  profit 
and  loss  under  simple  business  conditions.  When  you  thoroughly 
grasp  the  principles  in  this  chapter,  and  have  worked  out  the 
problems  in  Volume  V  which  will  serve  to  impress  the  theory 


BUSINESS  ACCOUNTING—VOLUME  I  27 

on  your  mind,  you  will  be  beginning  to  acquire  a  mastery  of  the 
theory  of  accounts. 

After  carefully  studying  the  contents  of  this  chapter,  it  is 
suggested  that  the  student  read  the  first  three  chapters  in  Vol- 
ume IV.  With  the  knowledge  already  acquired,  there  is  little 
or  nothing  that  the  reader  cannot  readily  grasp  in  the  opening 
chapters  of  the  more  advanced  book,  and  this  peep  into  the 
future  will  give  a  better  grasp  of  the  problem  of  closing  the 
books  for  the  purpose  of  determining  the  profit  or  loss  for  the 
period — the  most  important  task  that  a  bookkeeper  can  be  called 
upon  to  perform. 

The  last  section  in  this  chapter  explains  an  exceedingly  im- 
portant accounting  principle,  viz.,  that  the  profit  or  loss  for  the 
period,  as  shown  in  the  profit  and  loss  statement,  must  be  ac- 
counted for  by  the  difference  between  the  capital  at  the  beginning 
and  at  the  end  of  the  period,  taking  into  consideration  any  draw- 
ings or  further  contributions  of  capital.  A  test  of  the  thorough- 
ness of  the  student's  work  on  the  preceding  chapters  will  be  his 
ability  to  grasp  why  this  is  so. 

Be  sure  to  work  out  the  problems  in  the  review  questions  and 
study  the  theory  persistently  until  all  points  that  at  first  are  not 
quite  clear,  become  clear  and  are  firmly  fixed  in  mind. 


Assignment  4 
PREPARATION   OF  STATEMENTS 

The  information  in  Chapters  IX,  X,  and  XI 
covers  the  technique  or  procedure  in  preparing  state- 
ments. Further  information  relating  to  the  closing 
entries  will  be  found  in  Volume  IV,  Part  I.  The  dis- 
cussion in  the  above  chapters  is  hmited  to  broad  prin- 


28  READING  GUIDE 

ciples  which  should  be  thoroughly  mastered  before 
important  details  are  taken  up  later. 

Statement  of  Trading  and  Profit  and  Loss  (Chapter  IX) 
As  an  aid  in  acquiring  correct  technique,  it  is  suggested  that 
after  studying  the  corrected  statement  on  page  101,  the  student 
should  attempt  to  draw  up  the  statement  in  proper  form  from 
the  data  given  in  the  trial  balance  on  page  90.  The  practice 
work  should  be  repeated  until  the  procedure  is  fixed  in  mind. 
Sections  8,  9,  and  10  contain  explanations  of  accounting 
theory  which  it  is  important  to  understand  so  clearly  that  no 
doubt  arises  as  to  the  method  of  applying  this  theory.  There- 
fore, be  persistent  in  the  practice  work  suggested  above.  The 
repetition  of  this  work  three  or  four  times  at  this  stage  will 
smooth  away  difficulties  which  otherwise  would  be  sure  to  crop 
up  later.  In  connection  with  the  study  of  this  chapter,  a  brief 
study  may  be  made  of  the  contents  of  Chapters  XXII  and 
XXIV,  Volume  IV,  in  which  more  advanced  forms  of  state- 
ments are  presented. 

Statement  of  Cash  Receipts  and  Payments  (Chapter  X) 

The  limitations  of  this  type  of  statement  should  be  carefully 
noted.  In  a  small  business  the  cash  statement  might  furnish 
the  kind  of  information  most  frequently  required  by  the  pro- 
prietor. Where  the  proprietor  is  in  close  contact  with  oper- 
ations and  always  **on  the  job,*'  he  may  have  a  very  shrewd  idea 
of  the  value  of  his  stock-in-trade  at  all  times  and  require  an 
inventory  to  be  taken  only  at  long  intervals  for  purposes  of 
verification.  Under  such  conditions  a  periodical  cash  state- 
ment may  meet  all  requirements  between  the  times  when  the 
profit  and  loss  statement  is  drawn  up. 

The  Balance  Sheet  (Chapter  XI) 

To  acquire  the  art  of  drawing  up  a  statement,  correct  as  to 
form  aiid  clearness   of   presentation,  there   is   only   one  way — 


BUSINESS  ACCOUNTING— VOLUME  I 


29 


practice  and  yet  more  practice.  Rules  such  as  those  given  in 
§§3  and  4  of  this  chapter  are  useful  as  a  guide  but  they  can- 
not be  remembered  unless  they  are  repeatedly  utilized  in  prac- 
tice. Before  taking  up  the  practice  work  in  Volume  V  which 
relates  to  this  chapter,  the  student  should  draw  up  the  corrected 
form  of  balance  sheet  given  on  page  126,  taking  the  data  from 
the  incorrect  form  shown  on  pages  121  and  122. 

In  connection  with  thic  chapter  and  supplementary  to  the 
information  contained  therein,  it  is  well  for  the  reader  to  turn 
to  Volume  IV,  Chapters  XXI  and  XXIV,  where  more  elaborate 
forms  of  balance  sheet  statements  are  presented. 


Assignment  5 
INSOLVENCY  PROCEDURE 

The  contents  of  the  two  following  chapters  belong 
rather  to  the  sphere  of  advanced  accounting  than  to 
an  elementary  discussion  of  the  subject.  They  are 
included  in  this  volume  for  the  sake  of  completeness 
thus  furnishing  the  student  with  examples  of  all  the 
financial  statements  that  may  be  drawn  up  to  show 
financial  condition. 

Statement  of  Affairs — Realization  and  Liquidation  State- 
ment (Chapters  XII,  XIII) 
These  two  chapters  cover  the  procedure  for  the  winding 
up  of  an  insolvent  business  or  the  reorganization  of  an  insolvent 
concern  that  requires  more  working  capital.  The  work  in  this 
connection  is  of  such  a  character  that  only  the  accountant  of 
broad  experience  would  be  competent  to  handle  it.  If  the  aim 
of  the  student  is  to  acquire  a  rapid  working  knowledge  of  book- 
keeping, he  may  with  advantage  limit  his  study  of  these  chap- 
ters to  a  careful  reading. 


80  READING  GUIDE 

To  acquire  a  comprehensive  knowledge  of  accounting  prac- 
tice, the  student  must,  of  course,  be  able  to  prepare  every  kind  of 
financial  statement.  If  he  submits  himself  to  a  state  examina- 
tion for  the  purpose  of  testing  his  accounting  knowledge,  the 
examination  paper  is  likely  to  contain  one  or  more  problems 
covering  the  procedure  of  liquidation  or  reorganization.  There- 
fore, the  ambitious  student  must  sooner  or  later  understand  the 
procedure  and  principles  covered  in  these  two  chapters.  How- 
ever, more  rapid  progress  will  be  made  in  essentials  if  attention 
is  first  concentrated  on  simpler  or  more  elementary  matters. 

In  reading  Chapter  XII,  it  is  suggested  that  the  student 
assume  he  has  been  asked  by  a  committee  of  unsecured  creditors 
of  the  Jenkins  Company  (see  page  137),  a  concern  about  to  dis- 
solve, to  prepare  a  statement  that  will  show  as  nearly  as  possible 
the  percentage  of  claim  that  each  creditor  may  expect  to  receive, 
and  also  a  statement  that  will  show  the  loss  to  be  borne  by  the 
unsecured  creditors  on  forced  dissolution  of  the  business.  Let 
it  also  be  assumed  that  these  statements  are  to  be  the  basis  for 
a  decision,  on  the  part  of  the  creditors,  whether  or  not  they  will 
vote  for  the  dissolution  of  the  business  of  the  Jenkins  Company. 

This  is  an  example  of  the  usual  situation  which  gives  rise 
to  the  preparation  of  a  statement  of  affairs  and  a  deficiency  ac- 
count. The  text  not  only  illustrates  and  explains  the  technique 
of  preparing  these  statements  but  also  discussesT  the  legal  phases 
that  must  be  considered.  The  legal  phases  involved  in  the  prepa- 
ration of  a  statement  of  affairs  as  well  as  the  form  of  this  state- 
ment should  be  studied  carefully. 


Assignment  6 

SUPPLEMENTARY  STATEMENTS 

In  this   assignment   are   considered   the   various 
kinds  of  statements   which  the  bookkeeper  who  is 


BUSINESS  ACCOUNTING— VOLUME  I  3j 

capable  of  summarizing  results  might  be  called  upon 
to  prepare  at  regular  intervals.  In  a  large  organiza- 
tion the  head  accountant  would  ordinarily  prepare 
the  balance  sheet  and  profit  and  loss  statement,  call- 
ing upon  the  bookkeepers  to  prepare  the  necessary  ex- 
hibits, schedules,  or  statements  required  to  support 
the  major  statements.  The  bookkeeper  in  charge  of 
the  customers  ledger  would,  for  instance,  prepare  the 
schedule  of  accounts  receivable;  the  clerk  in  charge 
of  the  sales  journal  would  prepare  the  analytical  in- 
formation relating  to  sales,  and  so  on. 

The  Use  of  Supporting  Schedules  (Chapter  XIV) 

The  preparation  of  statements  involves  a  certain  amount  of 
statistical  work^  and  statistics,  rightly  used,  are  the  basis  of  all 
intelligent  business  direction.  Therefore,  the  compilation  of 
these  statistics  affords  the  bookkeeeper  a  field  in  which  he  can 
reveal  enterprise  and  judgment.  In  almost  every  business  the 
accounting  department  from  time  to  time  is  asked  for  informa- 
tion which  can  be  had  from  the  books  only  at  the  cost  of  much 
time  and  clerical  labor.  Had  the  same  information  been  com- 
piled concurrently  with  the  daily  routine,  in  many  cases  only  a 
fraction  of  the  labor'  expended  would  have  been  necessary. 

As  a  general  rule  it  may  be  said  that  statistical  information 
is  of  value  only  when  the  figures  are  presented  in  &  comparative 
form,  and  are  compiled  to  indicate  the  trend  or  tendency  of 
business  activities  over  a  sufficiently  long  period  of  time.  Such 
data  is  always  of  interest  and  may  often  be  of  great  value  to 
the  management.  Practically  every  concern  which  suddenly 
finds  itself  in  financial  difficulty  -without  having  realized  the 
direction  in  which  it  was  drifting  may  be  said  to  have  neglected 
the  information  buried  within  its  books.  Or,  if  this  information 
has  been  presented  to  the  management  in  proper  statement  fonn, 


82  READING  GUIDE 

the  significance  of  the  data  must  have  been  wilfully  ignored  or 
not  properly  understood.  No  competent  accountant  will  ever 
fail  to  furnish  the  management  with  the  full  statistical  informa- 
tion required  to  show  not  only  the  financial  condition  and  the 
profit  or  loss,  but  also  the  source  of  the  profit  or  the  cause  of 
the  loss  and  the  reasons  for  changes  in  financial  condition.  To 
analyze  such  causes  and  to  show  tendencies  is  the  final  goal  of 
all  accounting  viewed  from  the  administration  aspect. 

In  the  study  of  the  chapter  under  review,  particular  atten- 
tion is  called  to  §  3,  in  which  a  clear  distinction  is  drawn  to  the 
different  kinds  of  statements  and  the  terminology  that  should  be 
applied  in  each  case. 


Assignment  7 
THE  THEORY  OF  JOURNALIZING 

The  five  chapters  included  under  this  title  discuss 
the  theory  and  practice  underlying  the  use  of  the 
journal  in  its  simplest  form.  The  book  known  as  the 
^'journaF'  was  at  one  time  the  only  book  of  original 
entry  used.  In  it  were  entered  all  the  business  transac- 
tions, i.e.,  sales,  purchases,  cash  receipts  and  pay- 
ments, as  well  as  notes  received  and  given,  classified 
as  to  accounts  and  amounts  to  be  debited  or  credited 
in  the  ledger.  (See  illustrations  on  page  171  in  the 
text.)  But  when  business  began  to  be  conducted  on 
a  large  scale  and  transactions  became  more  numerous 
and  involved,  thus  making  it  impossible  for  one  man 
to  record  all  the  transactions,  it  was  found  necessary 
to  introduce  special  journals,  such  as  the  cash  journal 


BUSINESS  ACCOUNTING— VOLUME  I  gg 

illustrated  in  simple  form  on  page  191,  and  in  a  more 
developed  form  on  pages  216  and  217.  The  purchase 
journal  is  illustrated  in  simple  form  on  page  200, 
and  in  developed  form  on  pages  234  and  235.  The 
sales  journal  is  likewise  illustrated  in  simple  form  on 
page  208,  and  in  developed  form  on  pages  250  and 
251. 

The  introduction  o:^  special  journals  such  as  the 
cash  journal,  purchase  journal,  and  sales  journal 
made  it  possible  to  distribute  the  work  of  recording 
transactions.  Thus,  while  one  man  was  engaged  in 
recording  purchases  in  the  purchase  journal,  another 
could  be  engaged  in  recording  cash  receipts  or  pay- 
ments in  the  cash  journal. 

Furthermore,  with  the  introduction  of  special 
journals  the  amount  of  mechanical  labor  formerly 
necessary  in  posting  was  greatly  reduced.  For  ex- 
ample, when  a  separate  book  is  kept  for  cash  receipts 
and  payments,  the  individual  receipts  and  payments 
are  no  longer  posted  to  the  Cash  account  in  the  ledger 
as  was  done  when  only  the  journal  was  used.  In- 
stead, at  the  end  of  each  month,  but  one  posting  is 
made  to  the  debit  side  of  the  Cash  account  in  the 
ledger  of  the  total  cash  received,  and  one  posting  to 
the  credit  side  for  the  total  cash  paid.  The  same 
treatment  holds  true  of  postings  made  from  other 
special  journals,  such  as  the  purchase  journal  and 
the  sales  journal. 

These  advantages  of  the  use  of  special  journals 
should  be  kept  in  mind  in  reading  the  sections  on  the 


84  READING  GUIDE 

technique  of  posting  from  special  journals,  as  ex- 
plained in  the  chapters  of  Part  III  and  in  subsequent 
chapters  in  the  text. 

The  Journal  (Chapter  XV) 

In  this  chapter  the  theory  of  journalizing  is  discussed  with- 
out regard  to  its  practical  business  application  to  cash,  purchase, 
or  sales  transactions.  Bookkeeping  begins  with  the  journaliza- 
tion of  every  transaction,  as  illustrated  on  page  171.  When  a 
transaction  is  correctly  journalized,  the  proper  debit  and  credit 
postings  present  no  difficulty.  As  practice  work  in  this  chapter, 
the  student  should  read  the  transactions  listed  in  §  2  and  mentally 
journalize  them  as  shown  in  §  4.  When  the  mental  work  can  be 
done  rapidly  and  correctly,  he  will  begin  to  get  a  grip  on  the 
theory  of  the  subject. 

Illustrative  Problems  (Chapter  XVI) 

The  method  of  opening  the  books,  as  illustrated  in  §§  1 
and  2,  should  not  merely  be  studied  but  should  be  worked  out 
as  shown  in  the  text.  The  transactions  itemized  in  §  3  should 
be  mentally  journalized  and  compared  with  the  solutions  given 
on  page  185.  This  mental  work,  when  practicable,  should 
always  be  repeated  until  the  faculty  is  acquired  of  solving  the 
problems  without  any  hesitancy  or  doubt  as  to  the  correctness 
of  the  solutions.  This  sureness  of  touch  is,  of  course,  the  aim 
and  end  of  all  practice  work  and  is  the  characteristic  that  dis- 
tinguishes the  man  who  knows  from  practical  experience,  from 
the  man  who  has  acquired  a  merely  halting  and  therefore  inade- 
quate theoretical  knowledge. 

Sections  4,  5,  and  6  contain  important  information  as  to 
accounting  procedure  which  it  is  necessary  to  memorize.  The 
theory  which  governs  the  recording  of  purchases  and  sales,  and 
receipts  and  payments,  is  covered  by  the  principles  of  double 
entry.      Returns    and   allowances    constitute   transactions    which 


BUSINESS   ACCOUNTING— VOLUME   I  35 

Will  puzzle  the  student  who   is   new  to  the   subject  unless  the 
information  in  §  6  is  grasped. 

The  practice  work  in  the  review  questions  should  be  care- 
fully done. 

The  Cash  Book  (Chapter  XVII) 

Only  the  general  theory  of  the  keeping  of  the  cash  book, 
with  a  description  of  the  most  essential  procedure,  is  taken  up 
in  this  chapter.  In  active  procedure  the  form  of  the  cash  book, 
that  is,  the  number  of  its  columns  and  the  purposes  they  serve, 
is  determined  by  the  use  of  controlling  accounts.  It  is  suggested 
that  the  student,  after  reading  this  chapter,  give  a  cursory  read- 
ing to  Chapter  XXIV  which  explains  controlling  accounts.  By 
this  means  the  relation  of  the  one  to  the  other  will  be  more 
clearly  seen. 

It  should  be  borne  in  mind  that  the  forms  of  books  of  orig- 
inal entry  vary  to  meet  individual  needs  and  tastes,  so  that  two 
cash  journals  that  have  exactly  the  same  form  are  seldom  found. 
The  same  holds  true  of  all  other  books  of  original  entry,  with 
possibly  one  exception — the  notes  receivable  and  notes  payable 
book.  Most  concerns  use  a  standard  book,  although  in  many 
instances  a  special  form  is  used. 

Purchase  Records  (Chapter  XVIII) 

The  same  observation  applies  to  the  discussion  of  the  pur- 
chase and  sales  journals  as  applies  to  the  discussion  of  the  cash 
book,  viz.,  that  the  use  of  controlling  accounts  and  subordinary 
ledgers  determines  the  form  and  ruling  of  these  journals.  Here 
only  the  simple  theory  of  their  operations  is  taken  up  so  far  as 
this  theory  covers  the  relation  of  tlie  journals  to  the  ledger.  A 
business  buying  or  selling  only  one  kind  of  merchandise  would 
require  only  the  simple  forms  of  journals  herein  described.  But 
such  businesses  are  rare.  In  most  cases  it  is  desirable  to  dis- 
tinguish among  different  kinds  of  purchases  and  sales,  and  thi* 
requires  a  more  complicated  ruling  of  the  journals. 


35  READING  GUIDE 

If  the  student  thoroughly  understands  the  operation  of  a 
simple  cash  book  which  represents  the  two  sides  of  an  account, 
no  difficulty  will  be  experienced  in  grasping  the  theory  of  the 
sales  and  purchase  journals  each  of  which  represents  only  one 
side  of  an  account.  The  cash  book  records  both  the  inflow  and 
outgo  of  cash.  The  purchase  journal  records  the  inflow  of 
merchandise,  and  the  sales  journal  the   outgo   of  merchandise. 

In  the  study  of  Chapter  XVIII,  particular  attention  needs 
to  be  devoted  to  §§6,  7,  and  8.  The  procedure  here  described  is 
that  of  a  business  which  buys  merchandise  for  resale.  Practice 
varies  in  different  lines  of  business,  and  the  accounts  that  may 
be  opened  on  the  books  of  one  concern  to  determine  the  gross 
profit  may  differ  from  those  of  another.  But  in  all  cases  the 
principle  is  the  same.  There  are  several  methods  of  determining 
the  gross  profit,  and  the  student  must  familiarize  himself  with 
them  all.  For  the  present  it  will  be  sufficient  to  grasp  thor- 
oughly the  procedure  most  commonly  used. 

Sales  Records  (Chapter  XIX) 

The  information  in  this  chapter  corresponds  in  many  ways 
to  that  given  in  the  preceding  chapter — with  the  difference,  of 
course,  that  sales  are  credited  whereas  purchases  are  debited. 
Note  in  particular  the  information  in  §  6.  The  method  of  deter- 
mining the  turnover  of  a  concern's  stock-in-trade  is  one  of  those 
elementary  problems  which  every  bookkeeper  ought  to  be  able  to 
figure  rapidly.  Unless  he  has  occasion  to  make  the  calcula- 
tion frequently,  he  is  often  at  a  loss  how  to  do  it. 


Assignment  8 
JOURNALIZING  PROCEDURE  AND  PRACTICE 

The   four   following  chapters   carry   the   discus- 
sion of  the  journal  and  its  rulings  a  stage  further. 


BUSINESS  ACCOUNTING— VOLUME  I  37 

The  more  complicated  forms  of  journals  are  taken 
up  in  Volume  II.  For  an  adequate  understanding  of 
the  complex  forms  a  thorough  grounding  is  required 
in  the  theory  of  the  simple  journals  and  the  oper- 
ation of  the  voucher  system  and  controlling  accounts. 

Miscellaneous  Cash  Matters  (Chapter  XX) 

Particular  attention  needs  to  be  given  to  the  illustrative 
form  and  entries  on  pages  216  and  217,  and  the  comment  on 
the  nature  of  those  entries.  Much  of  the  discussion  in  this  chap- 
ter covers  commercial  usage  and  business  practice  with  which 
the  student  must  familiarize  himself  from  beginning  to  end; 
otherwise  he  will  often  be  at  a  loss  in  recording  the  kind  of 
transactions  to  which  the  discussion  refers.  Note,  for  instance, 
the  method  of  handling  exchange  as  explained  at  the  end  of 
§  2,  and  the  method  of  handling  exchanged  checks  as  explained 
in  §3. 

Sections  4  to  9  contain  general  information  with  which  every 
cashier  must  be  familiar  if  his  cash  book  is  to  be  properly  kept. 

Section  11  takes  up  a  matter  which  under  complicated  busi- 
ness conditions  where  transactions  are  numerous  may  present 
difficulties  only  second  to  those  of  taking  a  trial  balance. 

Work  out  the  method  of  reconcilement  as  shown  in  §  12,  and 
when  you  feel  certain  that  you  have  mastered  the  method,  test 
your  knowledge  by  trying  to  solve  Problems  1  and  2  in  Volume 
V  without  consulting  the  solution  to  these  problems. 

After  studying  §§15  and  16,  turn  to  Problems  1  to  3  in 
Volume  V  and  try  to  solve  them.  Such  practice  work  as  this  is 
a  thorough  test  of  your  knowledge  of  the  correct  method  of 
handling  these  cash  details. 

Miscellaneous  Purchase  Matters  (Chapter  XXI) 

In  studying  the  contents  of  this  chapter  pay  particular 
attention  to  the  relationship  between  the  journal  entry  on  page 


38  READING  GUIDE 

237  and  the  totals  of  the  purchase  journal  on  pages  234  and 
235.  Note  the  difference  between  an  expenditure  which  is 
passed  through  the  purchase  journal^  and  an  expenditure  the 
payment  of  which  is  immediately  credited  to  cash — such  as  the 
expenditures  for  insurance,  rent,  and  other  impersonal  items 
shown  on  page  217.  The  review  questions  in  Chapters  XX  and 
XXI  contain  much  valuable  practice  work,  which  should  be  com- 
pleted, before  proceeding  further. 

The  Voucher  System  (Chapter  XXII) 

The  theory  of  this  chapter  is  contained  in  §  2,  and  the 
explanation  of  the  theory  is  illustrated  in  the  form  on  pages 
244  and  245.  The  student  should  carefully  compare  the  voucher 
form  with  the  purchase  journal  form  and  note  the  distinction 
between  the  two.  Supplementary  to  the  information  given  in 
§  7,  it  may  be  explained  that  the  voucher  record  is  commonly 
employed  by  manufacturing  concerns  which  either  pay  for  their 
purchases  promptly  or  which,  because  of  the  diversity  of  the 
sources  of  supply,  prefer  the  voucher  record  system  as  a  means 
of  saving  clerical  labor.  The  large  number  of  accounts  that 
would  have  to  be  opened  if  the  purchase  ledger  were  used  are 
thus  eliminated.  Further  instructions  of  the  voucher  system  are 
explained  in  Volume  II  of  the  Reading  Guide.  For  the  present 
the  discussion  in  the  chapter  under  review  covers  all  the  stu- 
dent's requirements.  Problem  4  in  Volume  V  will  test  your 
knowledge  of  the  theory  of  the  voucher  system. 

Miscellaneous  Sales  Matters  (Chapter  XXIIJ) 

In  many  respects  the  information  in  this  chapter  corresponds 
with  the  information  relating  to  purchases  in  Chapter  XXI. 
The  contents  of  the  two  chapters  should  be  compared  for  the 
purpose  of  noting  the  points  of  similarity  and  divergence.  The 
practice  work  required  by  the  review  questions  should  not  be 
omitted. 


BUSINESS  ACCOUNTING—VOLUME  I  3^ 

Assignment  9 

CONTROLLING  ACCOUNTS 

The  operation  of  controlling  accounts,  like  the 
principles  of  debit  and  credit,  is  one  of  those  pivotal 
accounting  points  on  which  the  student  must  concen- 
trate until  complete  mastery  is  obtained. 

Controlling  Accounts  (Chapter  XXIV) 

In  the  study  of  the  chapter  under  review,  it  is  suggested 
that  the  theory  of  the  matter  be  carefully  read  (§§  1  to  7),  after 
which  the  cash  book  on  pages  288  and  289  be  studied  in  the 
light  of  the  explanation  given  in  §  8.  To  impress  the  theory  on 
the  mind,  the  student  should  reproduce  the  cash  book  rulings 
from  memory  several  times — as  illustrated  on  pages  288  and 
289.  The  illustrative  transactions  on  pages  285  and  286  should 
be  entered  in  their  proper  columns  without  reference  to  the  ex- 
ample, and  the  total  figures  arrived  at  in  this  way  should  be 
compared  with  the  totals  of  the  example  to  check  the  accuracy 
of  the  work. 

After  the  theory  and  practice  in  Chapter  XXIV  are  thor- 
oughly mastered,  it  is  advisable  to  study  Chapters  XVII  and 
XVIII  in  Volume  II,  where  more  elaborate  rulings  of  the  cash 
book  are  shown.  It  will  be  found  that  the  operation  of  con- 
trolling account  cannot  be  mastered  in  one  or  two  attempts,  inas- 
much as,  however  clear  the  matter  may  seem  for  the  time  being, 
when  the  attempt  is  made  to  post  the  controlling  totals  to  the 
ledger,  the  mind  tends  to  become  confused  as  to  what  to  debit 
and  what  to  credit.  Practice,  and  practice  alone  can  overcome 
the  perplexities  of  the  subject. 

One  point  that  sometimes  perplexes  the  beginner,  when  he 
first  approaches  controlling  accounts  and  subsidiary  ledgers,  is 
the  fact  that  each  transaction  seems  to  require  three  entries — 
two  in  the  general  ledger  and  one  in  the  subsidiary  ledger.     It 


40  READING  GUIDE 

should  be  remembered,  however,  that  the  subsidiary  ledger  is 
merely  the  detail  of  the  controlling  account  in  the  general  ledger ; 
from  one  point  of  view  the  subsidiary  ledger  may  be  said  to  be 
used  only  for  the  purpose  of  recording  important  memoranda 
and  is  not  an  integral  part  of  the  bookkeeping  records.  The 
general  ledger  contains  all  information  about  the  transactions  of 
a  business;  a  controlling  account  gives  this  information  in  con- 
densed form.  So  long,  therefore,  as  the  sum  of  the  general 
ledger  debit  postings  equals  the  sum  of  the  credit  postings 
therein,  the  books  remain  in  balance  regardless  of  the  fact  that 
there  may  be  a  number  of  subsidiary  ledgers  the  entries  to  which 
are  mostly  debits  or  mostly  credits. 

It  may  here  be  noted  that  in  cost  accounting  controlling 
accounts  and  subsidiary  ledgers  are  frequently  used.  Without 
this  device  it  would  be  impossible  to  tie  up  the  general  ledger 
with  the  cost  ledgers  and  records  kept  in  the  factory.  For 
example,  an  account  headed  Stores,  or  several  accounts  headed 
with  the  names  of  the  raw  materials  purchased,  might  be  opened 
in  the  ledger  and  corresponding  columns  allotted  thereto  in  the 
purchase  journal  or  voucher  record.  The  detail  of  the  pur- 
chases is  shown  in  the  stores  ledger  kept  in  the  factory,  while 
only  the  totals  of  the  purchases  of  stores  or  raw  materials  are 
shown  in  the  general  ledger,  such  totals  being  posted  to  the  gen- 
eral ledger  from  the  purchasing  journal  or  voucher  record  at 
the  close  of  each  cost  period. 

Review  Question  5  is  intended  to  test  your  knowledge  of 
the  theory  of  controlling   accounts. 


Assignment  10 

DISCOUNTS  AND  NOTES 

The  four  chapters  in  this  division  of  work  furnish 
much  general  information  about  the  nature  of  dis- 


BUSINESS  ACCOUNTING— VOLUME  I  41 

counts  and  notes  and  discuss  the  method  of  their 
accounting.  The  recording  of  discounts  and  note 
transactions  on  the  books  is  part  of  the  bookkeeping 
procedure  which  is  confusing  to  beginners  until  prac- 
tice smooths  away  the  difficulties. 

Trade  Discount  and  Cash  Discount  (Chapter  XXV) 

Sections  1  to  10  of  this  chapter  cover  ordinary  business 
practice,  a  knowledge  of  which  the  bookkeeper  requires  but 
which  knowledge  has  no  bearing  on  accounting  theory.  The 
explanation  of  the  method  of  recording  discounts  on  the  books 
begins  at  §  11.  From  here  on,  the  reader  should  study  the  text 
in  the  light  of  the  illustration  given  on  pages  288  and  289. 

Attention  needs  to  be  directed  to  the  study  of  the  illustrative 
transactions  on  pages  285  and  286.  First  practice  their  jour- 
nalization mentally  until  their  entry  in  the  cash  book  can  be 
readily  visualized.  After  this  mental  work  the  cash  book  rulings 
should  be  drawn  from  memory  (as  previously  suggested),  and 
entries  in  the  cash  book  should  be  made,  using  the  illustrative 
transactions  as  a  basis.  In  studying  the  list  of  transactions  on 
pages  285  and  286,  the  journalization  of  the  items  under  the 
dates  of  September  3,  15,  and  30,  which  items  are  note  trans- 
actions, will  be  more  clearly  understood  after  the  explanatory 
matter  dealing  with  such  notes  has  been  covered  in  the  following 
chapter. 

Problems  6  and  7  in  Volume  V  furnish  valuable  practice 
work  covering  the  information  given  in  this  chapter. 

Illustrative  Cash  Book  Entries  (Chapter  XXVI) 

The  practice  work  in  this  chapter  will  already  have  been 
covered.  To  acquire  the  requisite  facility,  however,  in  journaliz- 
ing transactions,  the  exercise  may  with  advantage  be  repeated 
several  times. 


42  READING   GUIDE 

Notes  and  Trade  Acceptances  (Chapter  XXVII) 

Sections  1  to  8  of  this  chapter  comprise  preliminary  in- 
formation, a  knowledge  of  which  is  required  for  the  correct 
recording  of  notes  receivable  and  payable.  The  debiting  and 
crediting  of  these  items  often  appears  complicated  and  much 
practice  is  needed  before  you  will  acquire  the  proper  facility. 
The  procedure  in  §  §  9  and  1 1  should  be  carefully  impressed  on 
the  mind,  and  the  necessary  practice  may  be  obtained  by  men- 
tally journalizing  the  transactions  given  in  Chapter  XXVIII, 
page  307. 

Note  Transactions  Journalized  (Chapter  XXVIII) 

This  chapter  affords  further  practice  in  the  use  of  control- 
ling accounts.  After  studying  the  columnar  journal  shown  on 
page  309,  try  to  reproduce  the  ruling  and  headings  from  memory 
until  an  accurate  reproduction  can  be  made.  The  illustrative 
entries  on  page  307  should  then  be  entered  in  the  skeleton  form, 
and  the  totals  compared  with  those  given  on  page  309  as  a  check 
on  the  accuracy  of  the  work.  Without  such  practice  as  this 
it  is  impossible  to  master  the  theory  of  controlling  accounts  or 
acquire  facility  and  accuracy  in  the  recording  of  note  trans- 
actions. 


Assignment  11 

MISCELLANEOUS  MATTERS 

This  assignment  of  work  covers  the  isolated  sub- 
ject of  depreciation  and  a  final  chapter  on  the  jour- 
nals illustrative  of  posting  problems. 

Depreciation  (Chapter  XXIX) 

The  discussion  of  depreciation  in  this  chapter  covers  the 
knowledge  required  to   handle   the   problem   of  depreciating  or 


BUSINESS  ACCOUNTING— VOLUME  I  43 

writing  off  the  value  of  the  plant  and  machinery  belonging  to  a 
small  manufacturing  concern.  Moreover,  in  every  business, 
whether  manufacturing  or  mercantile,  provision  must  be  made 
for  bad  debts,  and  the  method  of  depreciating  the  accounts  re- 
ceivable described  in  §  11  is  one  with  which  every  bookkeeper 
is  required  to  be  familiar. 

A  more  detailed  discussion  of  the  accounting  requirements 
for  the  handling  of  depreciation  in  a  large  manufacturing  con- 
cern will  be  found  in  Volumes  III  and  IV.  For  the  present  the 
student  is  concerned  merely  with  the  general  principles  of  the 
subject  given  in  this  chapter. 

Problems  8  to  10  in  Volume  V  furnish  practice  work  in 
accounting  for  depreciation,  and  Problems  11  and  12  similar 
work  in  handling  losses  from  bad  debts. 


The  Use  of  Subsidiary  Books  (Chapter  XXX) 

This  chapter  is  important  and  demands  your  concentrated 
attention.  It  is  especially  designed  to  test  the  thoroughness  of 
the  knowledge  you  have  so  far  acquired.  Suggestions  as  to 
the  method  of  its  study  are  given  in  the  opening  section.  It  is 
necessary,  therefore,  only  to  emphasize  the  value  of  the  practice 
work  afforded  by  this  chapter  as  a  test  for  any  weak  spots  in 
theory  and  practice.  If  any  are  found,  the  preceding  informa- 
tion should  be  reviewed  until  both  theory  and  practice  are  so 
firmly  fixed  in  mind  that  the  transactions  given  on  page  329 
can  be  posted  and  a  trial  balance  drawn  up  without  any  mental 
hesitancy  and  with  absolute  accuracy. 

Attention  is  again  drawn  to  the  importance  of  following  the 
precise  form  of  the  journal  entries  illustrated  on  pages  330  to 
333. 

After  completing  the  practice  work  in  this  chapter,  turn  to 
Problem  13  in  Volume  V  and  try  to  solve  it.  The  requirements 
of  this  problem  will  test  the  thoroughness  of  your  knowledge  of 
the  theory  of  journalizing. 


44  READING  GUIDE 

Assignment  12 
PARTNERSHIP    AND    CORPORATION    FEATURES 

In  the  three  following  chapters  only  those  essen- 
tial points  of  difference  are  discussed  which  arise  in 
the  recording  of  partnership  and  corporation  trans- 
actions. 

Partnership  Accounting  (Chapters  XXXI  and  XXXII) 

The  method  of  opening  the  partnership  books,  as  described 
in  the  opening  sections  of  Chapter  XXXI,  involves  no  new  ac- 
counting theory.  In  §  4  an  illustration  is  given  of  an  accounting 
problem  which  is  of  frequent  occurrence.  Such  difficulties  crop 
up  to  confront  every  bookkeeper,  and  a  thorough  mastery  of 
accounting  theory  is  required  to  handle  them.  The  routine  book- 
keeper is  usually  at  a  loss  as  to  the  correct  procedure.  But  any- 
one who  has  a  clear  understanding  of  the  theory  of  the  subject 
as  well  as  ordinary  facility  in  practice  will  have  no  difficulty  in 
working  out  the  correct  solution. 

Sections  7  to  1 1  need  to  be  studied  with  unusual  care  because 
their  theory  is  difficult  to  impress  upon  the  memory.  Most  of 
the  problems  which  are  peculiar  to  partnership  accounting  have 
to  do  with  the  division  of  the  partnership  profits,  and  careful 
attention  should  be  given  to  the  principles  on  which  this  division 
is  based. 

The  problems  which  arise  on  the  dissolution  of  a  partnership 
are  often  perplexing.  Considerable  practice  is  necessary  to 
acquire  the  knowledge  and  experience  required  to  cope  with  these 
difficulties.  The  student  will  find  such  practice  in  working  out 
Problems  14  to  22  in  Volume  V^  devoted  to  partnership  trans- 
actions. 

Corporation  Accounting  (Chapter  XXXIII) 

The  chief  point  of  this  chapter  is  to  show  wherein  the 
accounting  for  a  corporation  differs  from  that  for  a  partnership 


BUSINESS  ACCOUNTING— VOLUMi:  I  4U 

or  sole  proprietorship.  The  theory  of  tlie  subject  is  covered  in 
§§  6  and  7  to  which  careful  study  should  be  devoted.  In  Volume 
IV  the  more  complicated  phases  of  corporation  accounting  arc 
discussed  in  detail. 

Problems  23  to  25   iti  Volume  V  furnish  practice  work  in 
handling  entries  relating  to  corporation  accounts. 


Assignment  13 
SINGLE-ENTRY  SYSTEM 

The  fundamental  characteristics  of  the  single- 
entry  system  of  bookkeeping  are  taken  up  in  the  two 
chapters  of  this  assignment. 

Single-Entry  Bookkeeping  (Chapters  XXXIV  and  XXXV) 
The  single-entry  method  is  still  commonly  employed  in  the 
one-man  business  where  the  volume  of  transactions  is  insufficient 
to  occupy  the  full  time  of  a  competent  bookkeeper.  As  such  a 
business  grows^  the  accountant  is  frequently  called  in  to  trans- 
form the  single-entry  method  into  a  double-entry  system.  This 
phase  of  the  work^  which  is  covered  in  the  problems  in  Volume 
V,  is  one  which  every  accountant  should  carefully  study,  and 
to  handle  it  a  knowledge  of  the  theory  of  single  entry  is  required 
— as  given  in  these  two  chapters. 


Assignment  14 
ACCOUNT  CLASSIFICATION 

These  two  chapters  are  really  a  resume  of  the 
theory  of  account  keeping  and  are  useful  for  the  pur- 


46  READING  GUIDE 

pose  of  checking  up  the  knowledge  already  acquired. 
They  also  serve  the  equally  useful  purpose  of  refer- 
ence when  working  out  the  problems  in  Volume  V 
which  relate  to  Volume  I. 

Analysis  of  Debit  and  Credit  Accounts  (Chapters  XXXVI 
AND  XXXVII) 
If  in  the  study  of  these  two  chapters  the  student  finds  that 
his  knowledge  on  certain  points  is  hazy,  or  that  the  operation  of 
a  particular  account  is  other  than  he  supposes,  there  is  clearly  a 
need  of  his  going  back  to  the  earlier  subject  and  obtaining  a 
firmer  grasp  of  its  meaning. 


Volume  II 
Constructive  Accounting 


ASSIGNMENTS  FOR  VOLUME  II 

Assignment  1 
PRELIMINARY  EXPLANATION 

Constructive  accounting  is  the  application  of  the 
principles  and  methods  of  procedure,  already  ex- 
plained in  Volume  I,  to  the  requirements  of  individual 
businesses.  Chapters  J  to  III  give  a  swift,  compre- 
hensive review  of  matters  with  which  the  student  of 
constructive  accounting  must  be  familiar  before  he 
can  profitably  begin  the  special  work  of  the  subject. 
They  should  be  read  through  attentively  but  do  not 
call  for  detailed  study. 

Introductory  (Chapter  I) 

The  object  here  is  to  present  a  bird's-eye  view  of  the  gen- 
eral field  of  accounting  in  order  to  locate  the  special  task  of  the 
constructive  accountant.  The  tabulation  form  aids  the  student 
in  definitely  outlining  the  material. 

The  Working  Organization   (Chapter  II) 

From  the  beginning  the  student  of  constructive  accounting 
should  cultivate  the  habit  of  visualizing  in  definite  form  the 
organization  scheme  of  the  business  with  which  he  has  to  work. 
The  facts  and  relationships  sketched  in  Chapter  II  are  familiar 
individually  to  most  accountants.  The  effort  to  formulate  them 
fully  and  correctly  by  means  of  diagrams  is  a  good  foundation 
for  the  work  of  this  volume. 

The  student  will  find  it  beneficial  to  draw  additional  dia- 
grams for  himself  of  other  businesses  with  which  he  is  acquainted. 

49 


50  READING  GUIDE 

Development  of  Records  (Chapter  III) 

The  object  here  is  to  give  a  brief  description  of  the  various 
**books/*  the  tools  with  which  accounting  works,  and  of  their 
development.  It  affords  a  useful  review  of  Volume  I  from  a 
slightly  different  angle. 


Assignment  2 
THE  SURVEY  OF  THE  FIELD 

The  chapters  of  this  assignment  present  broadly 
the  chief  factors  involved  in  the  special  work  of  con- 
structive accounting,  showing  the  practical  applica- 
tion of  principles  of  accounting  analysis  to  a  succes- 
sion of  individual  cases.  In  brief  form  they  give  the 
result  of  much  experience  with  cases  of  widely  vary- 
ing nature.  The  student  will  find  it  profitable  to 
review  them  from  time  to  time  as  he  works  through 
the  book. 

The  student  should  observe  the  importance  that  is 
attached  to  tact  and  to  common  sense,  in  the  methods 
of  the  constructive  accountant.  To  lay  out  satisfac- 
torily a  system  of  accounts  requires  not  merely  close 
attention  to  the  special  circumstances  of  the  indi- 
vidual business  concerned,  but  full  allowance  at  all 
times  for  the  human  factors  of  its  personnel. 

These  chapters  emphasize,  in  fact,  the  need  of  a 
competent  knowledge  of  management  by  the  account- 
ant who  is  to  succeed  in  constructive  work. 


BUSINESS  ACCOUNTING—VOLUME  II  51 

The  Survey  (Chapter  IV) 

This  chapter  and  the  following  should  be  studied  carefully, 
section  by  section.  The  matter  presented  is  more  or  less  familiar 
to  most  business  men,  but  it  is  not  always  considered  in  any 
systematic  view  which  embraces  the  problem  of  constructive 
accounting  as  a  whole. 

The  following  items  should  be  noted: 

§  1.  The  three  "steps'*  of  the  accountant's  investigation. 

3.  The   points   to  be   considered  in   the   planning  of   a 

system.      These    should    be    definitely    memorized. 

8.   The  suggestion  with  regard  to  working  papers — an 

instance  of  the  practical  character  of  the  volume. 

Planning  an  Accounting  System  (Chapter  V) 

The  student  should  note  that  in  this  chapter  a  point  that  is 
especially  stressed  is  the  importance  of  caution,  patience,  and 
tact  on  the  part  of  the  accountant  throughout  his  diagnosis  of 
the  business  under  examination. 

Note  in  §  1  the  reference  to  chapters  in  Volume  I  which 
bear  on  the  point  in  hand.  One  of  the  features  of  the  present 
set  of  volumes  is  the  convenience  of  such  comparison  and  cross- 
reference. 

Forms  and  Records  (Chapter  VI) 

The  important  principles  of  form  construction  explained  in 
this  chapter  need  thoughtful  study.  Once  these  are  mastered 
and  applied  in  a  few  cases,  the  task  of  committing  to  memory 
the  more  or  less  standard  forms  and  records  used  in  different 
kinds  of  business  is  greatly  simplified.  A  knowledge  of  the 
information  a  specific  form  is  intended  to  record  should  bring 
to  mind  the  kind  of  record  that  is  used. 

Loose-Leaf  and  Bound  Records  (Chapter  VII) 

This  chapter  presents  a  concise  summary  of  points  relating 
to  the  physical  form  of  records.     In  connection  with  this  dis- 


52 


READING  GUIDE 


cussion  it  might  be  well  to  read  Chapter  XXIX  on  mechanical 
aids. 


Assignment  3 
PURCHASING  RECORDS 

The  basis  for  all  definite  work  in  constructive 
accounting  is  given  here  in  the  five  chapters  which 
treat  the  subject  of  purchasing.  They  should  receive 
careful  and  systematic  studJ^ 

The  accounting  procedure  in  connection  with  pur- 
chases is  outlined  and  discussed  in  Chapters  XI  and 
XII.  Before  this  discussion  can  be  profitably  taken 
up,  however,  it  is  indispensable  that  the  student 
obtain  a  comprehensive,  well-arranged  view  of  the 
organization  of  a  purchasing  department  and  its 
activities.  This  is  presented  in  Chapters  VIII,  IX, 
and  X.  The  remark  with  which  the  author  closes 
his  whole  discussion.  Chapter  XII,  §  8,  is  significant: 
"The  system  to  be  used  for  handling  purchases  de- 
pends entirely  on  the  business  under  consideration. 
....  Each  separate  case  must  be  determined  by 
careful  examination  of  its  own  distinct  problems. 
Preference  for  one  system  over  another  depends  upon 
such  matters  as  strength  of  office  force,  quantity  of 
invoices  received,  financial  status,  etc." 

In  view  of  this  fact,  the  description  in  Chapters 
VIII,  IX,  and  X  calls  for  careful  study.  The  stu- 
dent should  begin  work  in  this  assignment  by  reading 


BUSINESS  ACCOUNTING— VOLUME  II  53 

through  these  three  chapters,  to  get  a  view  of  the  flow 
of  operations.  He  should  then  take  them  up  in  detail 
to  fix  each  step  in  mind  before  passing  on  to  Chapters 
XI  and  XII. 

Purchasing  Department  Organization  (Chapter  VIII) 

A  brief  outline  characterization  of  the  function  of  the  pur- 
chasing department  in  general  is  made.  One  portion  of  the 
chapter  which  should  be  carefully  studied  is  the  orderly,  con- 
venient, and  brief  enumeration  of  purchasing  department  activi- 
ties in  §  5. 

Purchasing  Department  Routine  (Chapter  IX) 

This  is  a  long  chapter  which  traces  the  purchasing  procedure 
through  its  first  stages  until  the  order  is  placed.  It  should  be 
not  merely  read  through  in  connection  with  Chapters  VIII  and 
X,  but  studied,  item  by  item. 

In  this  careful  second  reading  note  especially: 
§  3.   The  steps  of  the  purchasing  routine. 
5,  6,   and   7.   The   description   of  the  purchase   requisi: 

tion. 
9.   The  description  of  the  purchase  order. 
10.   The  description  of  the  purchase  order  register. 

Purchase    Department    Routine — Continued    (Chapter    X) 
This  chapter  traces  the  later  stages  of  the  purchasing  proc- 
ess— the    handling    of    the    invoice    for    goods    bought.      In    the 
student's  careful  second  reading  he  should  notice: 

1.  The  enumeration  of  the  varieties  of  error,  in  connection 

with  invoices,  against  which  the  purchasing  depart- 
ment must  continually  guard. 

2.  The  description  of  the  leading  methods  and  devices  for 

recording  and  checking  invoices  which  are  used  in 
purchasing  departments  and  with  which  the  account- 


54  READING  GUIDE 

ant  who  has  to  build  a  system  needs  to  be  closely 
familiar. 

Purchase  Records  (Chapter  XI) 

This  chapter,  together  with  Chapter  XII,  gives  the  detailed 
discussion  of  accounting  procedure  to  which  the  preceding  three 
chapters  are  introductory.  The  text  should  be  worked  through 
slowly,  step  by  step.  The  object  should  not  be  merely  to 
understand  the  meaning  of  forms  and  methods,  but  to  realize 
plainly  under  what  conditions  they  are  used  and  how  they 
operate.  This  requires  a  clearly  differentiated  notion  of  what 
each  of  the  ten  forms  of  purchase  records  is  and  the  type  of 
business  to  which  it  is  suitable.  To  visualize  definitely  their 
various  advantages  and  disadvantages,  try  to  apply  these  forms 
for  yourself  to  some  business  with  which  you  are  acquainted. 
Be  sure  to  grasp  the  distinction  between  a  purchase  journal  and 
a  voucher  register.  In  this  connection  it  is  well  to  refresh  the 
memory  with  the  theory  of  the  subject  by  rereading  Chapter 
XXII,  Volume  I.  Do  not  fail  to  master  the  handy  summary  of 
the  arguments  for  and  against  the  voucher  system  in  §  9. 

Purchase  Records — Continued  (Chapter  XII) 

This  is  a  short  but  important  chapter,  which  discusses  de- 
vices for  making  the  purchase  records  more  convenient  and  more 
accurate.  Notice  especially  the  methods  of  handling  returned 
goods  and  allowances,  and  of  correcting  errors  of  computation, 
and  the  like,  which  are  discovered  after  the  regular  entries  have 
been  made. 


Assignment  4 

STORES 

The  subject  matter  here  is  closely  related  to  that 
of  the  last  part  of  Assignment  3,    Once  the  student 


BUSINESS  ACCOUNTING— VOLUME  II  55 

has  an  orderly  grasp  of  the  flow  of  operations  in  the 
purchasing  department,  he  should  be  able  readily  to 
add  on  the  stores  operations  as  a  continuation  of  the 
process. 

Stores  Systems  (Chapter  XIII) 

In  the  study  of  this  chapter  the  first  aim  should  be  to  obtain 

a  full  and  orderly  view  of  the  operating  activities  in  connection 

with  stores,  in  which  the  accounting  phenomena  originate.     The 

specific  functions  of  the  stores  department  are  set  forth  in  §  6. 

In  his  detailed  study  of  the  chapter  the  student  should  note: 

§  1.  The  two  different  forms  of  stores  organization. 

2.  The  definition  applied  to  the  term  "stores." 

6.  The  enumeration  of  the  four  steps  of  the  stores  de- 

partment's  activity. 

7.  The  space  given  to  the  discussion  of  the  technique 

of  receiving  goods  and  to  descriptions  of  the  ma- 
terials received  record.  Observe  here  that  the  dis- 
cussion of  receiving  certain  sorts  of  materials, 
"goods  returned  from  customers/'  is  deferred  to 
Chapter  XVI,  page  175,  in  connection  with  sales. 
8  to  11.  The  space  given  to  full  discussion  of  the  stores 
ledger  and  its  advantages,  and  of  the  process  of 
installing  it.  Here  observe  the  handling  of  dupli- 
cate sheets.  Observe  also  that  the  stores  ledger, 
aside  from  other  functions,  serves  as  a  continuous 
inventory. 


Assignment  5 
SALES  RECORDS 
The  treatment  of  sales  is,  on  the  whole,  like  tliat 
of  purchasing.    The  whole  course  of  procedure  rehit- 


55  READING  GUIDE 

ing  to  sales  is  assembled  and  presented  in  orderly 
form  as  a  basis  for  the  study  of  the  accounting  work 
involved.  Without  a  clear  grasp  of  the  clerical 
routine  through  which  sales  orders  pass  in  different 
types  of  business,  the  reason  for  the  accounting  rec- 
ords and  for  the  method  of  their  handling  is  unin- 
telligible. 

Sales  matters  relating  to  organization  and  oper- 
ation are  less  easily  differentiated  from  accounting 
matters  than  in  the  case  of  purchasing.  The  student 
should  therefore  first  read  through  all  three  chapters 
of  the  discussion  before  concentrating  on  study  of  the 
details. 

Sales  Department  Organization  (Chapter  XIV) 

Careful  note  should  be  made  of  the  list  of  functions  of  the 
sales  department,  in  §  2. 

As  foundations  for  all  further  study,  the  student  should 
obtain  a  definite  conception  of  the  three  methods  of  retail  sell- 
ing and  of  the  difference  in  organization  of  the  sales  department 
which  each  method  entails,  as  explained  in  §  4.  Then  he  should 
visualize  for  himself  with  equal  definiteness  the  differences  in 
situation  and  methods  between  the  retail  business,  the  whole- 
sale— ^jobbing — business,  and  the  mail-order  business,  as  sketched 
in  §§4  to  7.  Finally  he  should  study  closely  the  detailed  de- 
scription in  §  8  of  the  highly  developed  organization  that  com- 
bines all  three  types. 

Sales  Order  Routine  (Chapter  XV) 

Chapter  XV  takes  up  in  detail  the  first  part  of  the  work 
of  recording  and  accounting  for  sales.  It  traces  the  handling 
by  the  sales  department  of  the  individual  sales  orders  on  which 
the  accounting  for  sales  is  based. 


BUSINESS  ACCOUNTING— VOLUME  II 

57 

Note  carefully  •(§!)  that  whereas  the  sales  order  may 
originate  in  three  different  ways,  the  routine  of  handling  it  is 
practically  the  same  for  all  of  them.  It  is  important  to  fix 
carefully  in  mind  the  successive  steps  of  this  routine.  The  stu- 
dent would  do  well  to  follow  through  the  handling  of  sales 
orders  in  various  businesses  with  which  he  is  acquainted,  com- 
paring the  process  with  the  description  here  given. 

Study  closely  in  particular  the  detailed  description  in  §  6  of 
the  duplicate  copies  of  the  sales  order  and  their  disposition. 

Sales  Records  (Chapter  XVI) 

This  chapter  traces  the  later  steps  in  the  handling  of  sales 
records.     The  matter  presented  is  important. 

The  student  should  observe  that  the  chapter  falls  into  three 
principal  divisions,  as  follows: 

§§   1  to   12.    Methods  of  assembling  the  individual  sales 
orders  described  in  Chapter  XV. 
13  and   14.   Methods  of  recapitulations. 
15   to  24.    Special    phases    of    sales    transactions    and 
their  treatment. 

In  studying  the  first  of  these  groups  of  sections,  the  stu- 
dent should  note  that  the  development  of  the  separate  sales 
books  from  the  journal  is  closely  parallel  to  the  development  of 
separate  purchase  books.  He  should  clearly  grasp  the  various 
methods  of  making  out  the  original  record  (§§  7  to  10),  as  well 
as  the  differences  between  the  sales  book  of  a  wholesale  con- 
cern and  that  of  a  retailer. 

In  studying  the  special  phases  discussed  in  later  sections, 
close  attention  should  be  given  to  the  details  of  the  technique 
described.  The  remarks  on  returned  sales  in  §  15  should  be 
compared  with  those  in  Chapter  XIII. 

The  subject  of  cash  is  taken  up  fully  in  the  next  assign- 
ment ;  what  is  said  here  should  be  reviewed  at  that  time.  The 
student  should  differentiate  clearly  the   treatment  involved  ia 


58  READING  GUIDE 

connection  with  sales  on  consignment^  sales  on  approval^  C.  O.  D. 
sales,  instalment  sales,  and  coupon  books. 

After  completing  the  study  of  the  chapter,  the  student 
should  reproduce  from  memory  the  special  forms  required  in 
each  case.  A  thorough  knowledge  of  the  problem  involved  and 
of  the  information  which  the  records  must  supply  will  enable  the 
student   to   reproduce   the   required   records   with   accuracy   and 


Assignment  6 
CASH  RECORDS 

The  four  chapters  here  grouped  together  develop 
the  simple  theory  and  practice  which  underlie  the  use 
of  the  cash  book  as  explained  in  Volume  I,  Chapters 
XVII,  XX,  and  XXVI.  The  fundamental  infor- 
mation in  both  volumes  of  necessity  runs  on  parallel 
lines,  but  the  reason  for  the  use  of  distinct  records  and 
for  the  form  which  their  development  takes  under 
varying  conditions  of  business  is  fully  taken  up  in 
this  volume.  The  subject  may  be  more  profitably 
studied  as  a  whole  if  the  chapters  referred  to  in  Vol- 
ume I  are  reread  in  the  light  of  the  more  detailed 
information  given  in  this  volume. 

General  Cash  Records  (Chapter  XVII) 

This  chapter  as  a  whole  amplifies  the  discussion  of  the 
theory  of  the  cash  journal  as  presented  in  Volume  I,  Chapter 
XVII.  Particular  attention  should  be  devoted  to  §§4  and  9. 
3rhe  essentials  of  a  cash  system  as  explained  in  §  4  cover  certain 


BUSINESS  ACCOUNTING— VOLUME  II 


50 


rules  of  procedure  in  handling  cash.  These  rules  should  in- 
variably be  followed  if  the  clerical  work  is  to  be  done  with 
accuracy  and  dispatch;  but  in  the  business  where  trial  balances 
seldom  balance,  where  the  bookkeeper  spends  hours  in  recon- 
ciling his  bank  balance,  or  where  the  cashier  finds  his  cash  fre- 
quently "short"  or  "over/'  these  essential  rules  of  procedure  are 
more  often  ignored  than  observed.  Especially  is  this  the  case 
in  the  small  business  where  to  handle  cash  in  the  way  described 
seems  to  many  business  men  mere  "red-tape."  Everyday  ac- 
counting experience,  however,  proves  that  it  pays  in  time, 
trouble,  and  money  to  handle  cash  transactions  in  a  methodical 
way  such  as  that  described  in  §  4. 

The  differences  in  procedure  caused  by  the  different  treat- 
ment of  cash  discounts  described  on  page  198  are  always  a  cause 
of  mental  confusion  to  the  student  especially  when  the  books  are 
to  be  closed  and  the  cash  journal  columns  are  posted  to  the 
ledger.  No  one  method  is  more  generally  employed  than  another, 
and  commercial  usage  requires  that  the  accountant  be  conversant 
with  all  three  methods.  To  acquire  equal  facility  in  their  use, 
practice  work  is  necessary  such  as  that  furnished  by  the  keep- 
ing of  different  sets  of  books. 

General  Cash  Records   (Chapter  XVIII) 

In  the  study  of  the  practical  and  constructive  side  of  ac- 
counting represented  by  the  use  of  special  forms  and  records 
designed  for  special  purposes,  there  is  only  one  way  in  which 
the  design  of  a  particular  form  and  the  method  of  its  use  or 
operation  can  be  remembered.  The  form  should  be  drawn  from 
memory,  and  a  number  of  entries  should  be  made  on  the  records 
sufficient  to  impress  its  ruling  on  the  mind.  For  instance,  in  the 
study  of  this  and  other  chapters  where  the  rulings  of  the  jour- 
nals and  other  forms  are  shown,  the  illustrative  cash  book  entries 
on  pages  285  and  286  of  Volume  I  should  be  entered  on  all 
records  designed  for  the  recording  of  cash  transactions.  There- 
fore, the  practice  work  on  this  and  the  preceding  chapter  should 


60  READING   GUIDE 

include  the  drawing  of  the  forms  shown  on  pages  199^  202^  and 
208,  and  the  entry  of  the  above  transactions  on  those  forms,  A 
comparison  of  the  different  forms  and  headings  used  for  like 
transactions,  for  the  purpose  of  noting  their  differences  and  the 
reason  for  these  differences,  is  a  valuable  method  of  study. 

Further  rules  to  insure  accuracy  in  the  handling  of  cash 
items,  as  given  in  §  6,  should  be  noted.  In  reading  the  explana- 
tion of  the  development  of  a  particular  form  of  ruling,  the  rea- 
sons for  the  variations  should  be  studied  in  conjunction  with 
the  scrutiny  of  the  new  type  of  record,  and  the  reasons  for  the 
differences  in  the  arrangement  of  the  columns  should  be  men- 
tally formulated.  This  kind  of  analytical  reasoning  coupled 
with  the  reproduction  of  the  forms  from  memory  will  enable  you 
to  acquire  a  valuable  mastery  of  the  theory  which  governs  the 
use  of  different  accounting  records.  A  good  explanation  of  the 
use  of  the  voucher  check  is  given  in  §  7.  Many  bookkeepers  and 
business  men  receive  such  checks  in  ordinary  business  practice 
without  understanding  the  reason  for  their  use. 

Petty  Cash  Records  (Chapter  XIX) 

This  brief  chapter  is  a  development  of  §  15  in  Chapter  XX, 
Volume  I.  As  practice  work  on  this  chapter,  rule  the  petty 
cash  books  shown  on  page  219,  enter  a  dozen  or  more  fictitious  or 
supposititious  items  on  the  form,  total  the  columns  and  make  the 
necessary  journal  entry. 

Miscellaneous  Cash  Records  (Chapter  XX) 

The  cash  journal  illustrated  and  described  in  the  opening 
sections  of  this  chapter  is  suited  to  those  business  conditions 
where  numerous  cash  payments  are  made  for  merchandise  pur- 
chases which  are  departmentalized.  Its  advantages  are  that 
it  gives  a  more  detailed  analysis  of  cash  payments  than  is 
afforded  by  the  use  of  any  other  type  of  cash  book.  Section  5 
should  be  closely  studied  in  conjunction  with  Chapter  XXII, 
§  18.     The  remaining  sections  call  for  no  special  comment  other 


BUSINESS  ACCOUNTING— VOLUME  II  gj 

than  to  draw  attention  to  the  fact  that  Forms  63,  64,  and  66  arc 
merely   illustrative   of   the   use   of   special   records   for   special 

needs. 


Assignment  7 
MAIN  BOOKS— JOURNAL  AND  LEDGER 

The  three  chapters  here  grouped  together,  after 
summarizing  the  theory  of  the  journal  and  the  ledger 
as  explained  in  detail  in  Volume  I,  carry  the  dis- 
cussion of  the  development  of  the  journal  and  ledger 
entries  through  to  their  more  compHcated  forms.  It 
is  impossible,  within  the  pages  of  a  single  book,  to 
explain  and  illustrate  all  types  of  journals  and 
ledgers  as  well  as  the  variations  from  those  types 
which  are  used  in  actual  business  practice.  The  ex- 
amples here  given  have  been  selected  because  they 
explain  the  general  principles  underlying  the  develop- 
ment of  the  more  complicated  forms,  and  because  they 
are  those  most  commonly  met  with  in  business  ac- 
counting. 

The  Journal  (Chapter  XXI") 

The  two  opening  sections  of  this  chapter  recapitulate  in 
condensed  form  the  information  in  Volume  I,  Chapter  XV.  The 
gist  of  the  matter  is  contained  in  the  chart  of  books  of  original 
entry  (Form  57),  which  chart  is  worth  study.  Special  attention 
should  be  paid  to  §  3  which  makes  clear  the  present-day  func- 
tion of  the  general  journal  and  the  reason  for  its  very  limited 
use. 

As  a  business  grows  in  size  and  its  account  classification 
extends,  the  mistake  of  posting  to  the  wrong  account  is  one  that 


Q2  READING  GUIDE 

needs  to  be  guarded  against,  especially  when  a  number  of  book- 
keepers are  employed  who  do  their  work  largely  in  a  mechanical 
fashion.  The  journal  voucher  is  a  simple  modern  device  to  facili- 
tate accurate  posting,  and  a  device  which  is  rapidly  growing  in 
favor.  It  serves  its  purpose  by  telling  the  bookkeeper  what 
accounts  to  debit  and  what  to  credit.  Anything  which  does 
this  is  a  journal  voucher,  no  matter  in  what  form  it  may  appear. 
The  form  on  page  235  is  intended  to  illustrate  general  principles 
rather  than  the  kind  of  record  that  is  commonly  used. 

Study  carefully  the  theory  of  the  use  of  journals  of  three 
or  more  columns  as  explained  in  §§  6  and  7.  The  same  prin- 
ciple applies  to  the  use  of  a  journal  containing  a  dozen  or  more 
columns  as  applies  to  the  use  of  one  containing  three  columnst 
Every  controlling  account  and  subsidiary  ledger  requires  its  own 
column  in  the  journal  for  the  collection  and  classification  of  the 
transactions  to  be  posted  therein. 

As  practice  work  on  this  chapter,  it  is  suggested  that  the 
six-column  journal  shown  on  page  242  be  reproduced  from 
memory,  as  well  as  the  cash,  the  purchases,  and  the  sales  jour- 
nals, and  that  the  illustrative  entries  in  Volume  I,  pages  329  to 
331,  be  entered  in  their  respective  journals  and  the  totals  pre- 
pared for  posting  to  the  ledger. 

The  Ledger  (Chapter  XXII) 

No  section  of  this  chapter  can  be  singled  out  as  requiring 
more  detailed  study  than  any  other.  The  contents  as  a  whole 
should  be  slowly  assimilated.  The  practice  work  in  Review 
Questions  4  and  6  will  serve  to  impress  on  the  mind  the  reason 
for  the  particular  entry.  In  studying  the  different  rulings,  try 
to  think  of  types  of  business  transactions  which  require  each 
kind  of  ledger  ruling  for  their  most  convenient  handling. 

The  discussion  of  the  private  ledger  in  §  18  will  thoroughly 
test  your  knowledge  of  the  theory  of  double  entry.  If  you  can 
grasp  the  explanation  and  visualize  in  your  mind  the  method  of 
opening  and  operating  a  private  ledger,  you  may   be   assured 


BUSINESS   ACCOUNTING— VOLUME  II  ^3 

that  your  accounting  knowledge  is  thorougli  and  that  you  are 
building  on  a  sure  foundation.  If  you  cannot,  then  the  illustra- 
tion given  below  will  make  the  matter  clear  to  you.  In  studying 
the  illustration,  visualize  the  postings  to  the  different  accounts. 

General   Ledger   Trial   Balance    (After   Closing)* 


Cash    $  3,550.00 

Special    Deposits 5,000.00 

Investments    4,000.00 

Customers    17,340.00 

Inventory   of   Mdse 5,000.00 

Furniture  and  Fixtures.  1,500.00 

Plant    and    Equipment..  10,000.00 

Patents    10,000.00 

Drawings     2,250.00 


$58,640.00 


Notes   Payable    $  2,500.00 

Accounts    Payable 11,^10.00 

Wages    Payable 800.00 

Mortgage   Payable 3^^)0.00 

Capital   40,500.00 


$58,640.00 


General  Ledger  Trial  Balance  (After  Closing)  f 


Cash    $  3,550.00 

Customers    17,340.00 

Furniture  and  Fixtures.  1,500.00 
Plant  and  Equipment..  10,000.00 
Patents    10,000.00 


$42,390.00 


Notes  Payable $  2,500.00 

Accounts    Payable 11,840.00 

Wages     Payable 300.00 

Private    Ledger    Control 
Account     27,750.00 


^2,390.00 


Private  Ledger  Trial  Balance  (After  Closing) 


Special    Deposits $  5,000.00 

Investments    4,000.00 

Inventory   of   Mdse 5,000.00 

Drawings     2,250.00 

General   Ledger   Control 
Account 27,750.00 


$44,000.00 


Mortgage  Payable $  3,500.00 

Capital   40,500.00 


$44,000.00 


*  On  the  assumption  that  there  is  no  private  ledger, 
t  On  the  assumption  that  a  private  ledger  is  kept. 


64 


READING  GUIDE 


Classification  of  Accounts  (Chapter  XXIII) 

Sections  1  and  2  are  introductory  to  the  theory  of  the  sub- 
ject in  §  3.  In  the  study  of  the  examples  of  classification  sys- 
tems from  page  273  to  the  end  of  the  chapter,  you  should  memo- 
rize the  classification  shown  on  pages  273  to  276.  This  is  much 
easier  than  at  first  appears.  The  main  headings  of  assets  and 
liabilities  suggest  the  group  headings  of  fixed,  current,  deferred, 
and  so  on;  the  group  headings  suggest  the  subdivisions;  and  the 
subdivisions  indicate  the  titles  of  the  accounts  that  fall  within 
them.  Half  an  hour's  study  and  two  or  three  attempts  to  re- 
produce the  list  should  be  sufficient  to  impress  on  the  mind  the 
names  of  the  majority  of  the  accounts  and  their  classification. 
The  more  elaborate  classifications  beginning  on  page  277 
are  presented  for  reference  purposes,  also  for  detailed  study. 

After  completing  your  reading  of  this  chapter,  turn  to  Vol- 
ume V,  Problem  35,  and  work  out  the  classification  of  the  ac- 
counts shown  in  the  trial  balance  in  accordance  with  the  prin- 
ciples laid  down  in  this  chapter.  Then  compare  the  result  with 
the  solution  to  the  problem  which  presents  an  alternative  method. 


Assignment  8 

STATEMENTS 

As  the  subject  under  this  heading  is  completely 
covered  in  Volume  I,  Chapters  IX  to  XIV,  and  in 
Volume  IV,  Part  IV,  the  discussion  here  is  limited 
to  the  essential  and  elementary  information  required 
to  complete  the  unity  of  this  volume. 

Statements  (Chapter  XXIV) 

The  important  points  in  this  chapter  that  have  not  been 
touched  upon  in  Volume  I  and  to  which  in  consequence  special 


BUSINESS  ACCOUNTING— VOLUME  II  55 

attention  should  be  devoted,  are  those  in  §§  6  to  9.  As  examples 
of  comparative,  cumulative,  and  graphic  statements  will  be  found 
in  Volumes  III  and  IV,  the  present  chapter  requires  little  more 
than  a  careful  reading,  and  the  marking  on  the  margin  of  the 
points  to  be  memorized. 


Assignment  9 

EXPENSE  EXPENDITURES 

Chapters  XXV  and  XXVI  in  this  assignment  of 
work  cover  the  method  of  accounting  for  expenditures 
under  the  three  designated  heads  on  the  books  of  a 
concern  which  buys  merchandise  for  resale.  Chapter 
XXVII  discusses  a  method  of  controlhng  expense, 
which  increases  in  its  importance  as  a  business  grows 
in  size. 

Expense  (Chapter  XXV) 

The  accounting  theory  in  this  chapter  is  comparatively 
simple  and  summarizes  the  current  practice  of  commercial  houses. 
A  more  detailed  discussion  of  various  methods  of  accounting  for 
expense  will  be  found  in  Volume  III.  The  attention  of  the 
student  is  drawn  to  one  important  point  in  Chapter  XXV, 
namely,  that  the  expenses  of  the  purchasing  department  are 
added  to  the  cost  of  the  goods  sold,  whereas  administrative  and 
selling  expense  are  treated  as  deductions  from  gross  profits. 

Labor  and  Salaries  (Chapter  XXVI) 

The  information  in  this  chapter  is  included  for  the  sake  of 
completeness  and  for  the  benefit  of  those  students  who  do  not 
intend  to  make  a  special  study  of  cost   accounting.      As  cost 


QQ  READING  GUIDE 

accounting,  however,  is  somewhat  related  to  general  accounting, 
this  chapter  should  be  read  carefully. 

The  Budget  (Chapter  XXVII) 

The  information  here  relates  to  financial  policy  and  does 
not  concern  the  keeping  of  any  special  accounting  records.  The 
expenditures  of  preceding  periods  form  the  basis  of  the  budget 
for  the  current  period,  due  provision  being  made  for  changes  in 
policy  and  operations.  To  the  student  or  business  man  it  is  sug- 
gestive of  means  of  controlling  expenditures  rather  than  de- 
scriptive of  the  concrete  methods  to  be  employed.  The  actual 
methods  are,  for  obvious  reasons,  a  problem  which  every  business 
must  solve  in  its  own  way. 


Assignment  10 
MISCELLANEOUS  MATTERS 

The  special  records  and  the  office  devices  de- 
scribed in  these  two  chapters  are  so  frequently  met 
with  in  ordinary  business  practice  that  a  knowledge 
of  their  scope  and  use  is  information  with  which  every 
accountant  should  be  familiar. 

Special  Records  (Chapter  XXVIII) 

Either  a  notes  register  or  notes  journal  in  one  form  or 
another  is  a  part  of  the  bookkeeping  records  in  practically  every 
business  in  which  note  transactions  are  at  all  numerous.  Part  of 
the  practice  work  on  this  chapter  should  include  the  drawing  of 
Forms  76  and  77  from  memory,  and  the  entry  thereon  of  the 
illustrative  transactions  given  in  Volume  1,  Chapter  XXVIII, 
§2. 

Study  and  compare  the  ruling  of  Form  78  with  that  of  Form 
74  (page  258).     The  difference  between  the  two  forms  is  that 


BUSINESS  ACCOUNTING— VOLUME  II  ^^ 

the  corporation  stock  ledger  is  a  subsidiary  book  controlled  by 
the  Capital  Stock  account  in  the  general  ledger,  whereas  the 
corporation  stock  book  serves  as  a  journalizing  record  for  the 
assembling  of  the  totals  to  be  posted  to  the  ledger.  Forms  79 
to  82  are  records  devised  for  journalizing  purposes  and  they 
should  be  studied  from  this  angle.  Compile  mentally  the  journal 
entry  to  be  made  for  the  posting  of  the  data  accumulated  on 
these  supplementary  records.  In  studying  these  records  it 
should  never  be  overlooked  that  where  any  form  serves  as  a 
record  of  original  entry  it  fulfils  the  purposes  of  a  journal  from 
which  entry  may  be  made  on  the  regular  journal  or,  if  postings 
are  numerous,  direct  to  the  ledger.  Forms  84  and  85  are  in- 
tended to  illustrate  general  principles  and  it  is  unnecessary  to 
commit  their  special  rulings  to  memory.  In  this  connection  it 
may  be  noted  that  it  is  a  simple  matter  to  reproduce  any  special 
form  or  devise  a  new  form  for  a  special  purpose  when  the  kind 
of  information  to  be  recorded  and  the  purpose  it  is  to  fulfil  arc 
known.  , 

Mechanical  Aids  (Chapter  XXIX) 

This  chapter  consists  of  general  information  and  requires 
merely  a  careful  reading. 


Assignment  11 
SPECIAL   SYSTEMS 


The  three  chapters  discussed  below  cover  the  spe- 
cial points  in  retail,  wholesale,  branch,  and  mail- 
order accounting  which  necessitates  the  use  either  of 
distinctive  books  of  original  entry  or  of  distinctive 
accounting  methods.  The  operation  of  agency  and 
branch  accounting,  while  simple  in  theory,  becomes 


68  READING  GUIDE 

complicated  in  practice  because  of  the  necessity  of 
keeping  two  sets  of  records  which  must  "tie  up"  or 
articulate  with  each  other. 

Retail  and  Wholesale  Accounting  (Chapter  XXX) 

For  practice  work  on  this  chapter,  construct  the  cash  book 
sheet  described  in  §  8,  and  the  purchase  journal  and  notes  pay- 
able register  in  §  9.  Enter  on  these  records  a  number  of  sup- 
posititious transactions,  total  them,  and  journalize  the  totals 
for  ledger  entry  purposes. 

Agencies  and  Branches  (Chapter  XXXI) 

This  chapter  calls  for  methodical  and  patient  study.  For 
practice  work  in  the  operation  of  agency  and  branch  accounts, 
it  is  suggested  that  the  accounts  referred  to  be  constructed  and 
a  number  of  imaginary  transactions  be  journalized  and  posted 
therein.  This  will  help  to  impress  the  procedure  on  the  mind 
and  serve  as  an  introduction  to  the  study  of  Problems  37  and  41 
in  Volume  V.  These  may  be  taken  up  as  soon  as  the  theory  of 
the  subject  is  mastered. 

Mail-Order  Accounting  (Chapter  XXXII) 

The  general  procedure  of  mail-order  accounting  does  not 
materially  differ  from  ordinary  accounting  practice,  the  chief 
distinction  lying  in  the  ruling  of  the  cash  book  as  shown  on  page 
394.  This  form  should  be  carefully  studied  and  a  mental  analy- 
sis should  be  made  of  the  reasons  for  the  special  records  used. 


Assignment  12 
SPECIAL    SYSTEMS    (Continued) 

The  three  special  systems  in  this  group  have  dis- 
tinctive features  of  their  own.    One  engaged  in  ordi- 


BUSINESS  ACCOUNTING-VOLUME  II  ^ 

nary  business  may  never  have  occasion  to  handle  this 
particular  kind  of  accounting,  but  a  knowledge  of 
the  methods  employed  is  required  by  the  candidate 
for  a  C.  P.  A.  examination. 

Professional  Accounts  (Chapter  XXXIII) 

The  distinctive  features  of  most  special  systems  of  account- 
ing are  seen  in  the  ruling  of  the  cash  book  and  in  the  kinds  of 
records  kept  as  books  of  original  entry.  The  careful  study  and 
memorization  of  these  records  will  usually  suffice  to  give  the 
student  a  working  knowledge  of  how  to  handle  the  particular 
type  of  accounting  to  which  the  records  are  applied. 

Estate  Accounting  (Chapter  XXXIV) 

Estate  accounting  is  a  highly  specialized  branch.  One  pecu- 
liarity is  the  form  of  statement  which  the  executor  is  required  by 
law  to  furnish.  The  study  of  the  form  shown  on  page  411  in 
conjunction  with  the  text  will  give  the  student  an  insight  into 
the  special  features  of  this  branch  of  accounting  work. 

Stock  Brokers*  Accounts  (Chapter  XXXV) 

The  distinctive  features  of  this  type  of  accounting  are  seen 
in  the  use  of  the  blotter  (Form  109)  and  in  the  operation  of 
Long  and  Short  accounts.  This  system  of  account-keeping 
seems  complicated  and  puzzling  until  the  nature  of  the  trans- 
actions and  the  usages  which  govern  them  are  clearly  under- 
stood. Therefore,  the  explanation  of  the  principles  which  govern 
stock  exchange  transactions  should  be  studied  carefully. 


Assignment  13 
MISCELLANEOUS    SYSTEMS 
Of  the  five  remaining  chapters  of  this  book,  the 
first  three  take  up  the  distinctive  features  of  certain 


70 


READING  GUIDE 


special  systems,  a  knowledge  of  which  is  requisite  to 
round  out  the  education  of  the  accountant.  Chap- 
ters XXXIX  and  XL  serve  as  an  introduction  to, 
and  a  review  of,  the  field  of  cost  accounting,  and  ex- 
plain the  difference  between  the  cost  accounting  of  a 
manufacturing  business  and  the  financial  accounting 
of  a  trading  concern  which  analyzes  the  cost  of  goods 
sold.  The  final  chapter  in  the  book  needs  careful 
study.  The  principles  and  methods  involved  in  no 
way  differ  in  their  fundamentals  from  those  explained 
in  Volume  III. 


Volume  III 
Cost  Accounting 


ASSIGNMENTS  FOR  VOLUME  III 

Assignment  1 
GENERAL   PRINCIPLES 

This  volume  requires  from  the  reader  a  new  point 
of  view.  The  other  volumes  of  the  series  dealing  with 
general  accounting  draw  their  illustrations  mainly 
from  mercantile  transactions.  This  volume  on  cost 
accounting  is  concerned  more  particularly  with  in- 
dustrial enterprises. 

Chapters  I  and  II  lay  down  the  general  principles 
of  cost  accounting,  and  indicate  its  place  in  modern 
business.  They  do  not  enter  into  the  technique  of 
the  subject. 

Cost  Accounting  in  Modern  Business  (Chapter  I) 

This  chapter  can  be  studied  section  by  section,  inasmuch 
as  an  understanding  of  one  section  is  not  a  prerequisite  to  the 
understanding  of  the  others. 

Elements  and  Principles  of  Cost  Accounting  (Chaptbr  II) 
Several  classifications  of  costs  are  discussed  in  this  chapter. 
Note  the  threefold  classification  given  in  §  1.  The  most  im- 
portant point  to  be  gained  from  the  chapter  is  probably  the 
relation  between  the  classification  of  costs  into  direct  and  in- 
direct, and  the  accuracy  of  the  cost  figures. 

Note  that  expenses  as  indicated  by  the  chart  on  page  21 
are  numerous  and  are  classified  into  two  comprehensive  groups. 
While  the  author  mentions  in  this  chapter  the  difficulty  of  dis- 
tributing expenses,  you  will  not  fully  appreciate  this  point  until 

73 


74  READING  GUIDE 

you  have  concluded  the  reading  of  the  later  chapters  which  deal 
with  expense  distribution. 

Observe  the  need  for  prompt  presentation  and  compilation 
of  costs.     This  calls  for  a  short  cost  period. 

Before  leaving  this  chapter^  classify  costs  according  to  the 
different  methods  there  discussed  and  give  examples  of  each 
type.  Do  this  after  studying  §  8  but  do  not  refer  to  it  when 
making  your  classifications. 


Assignment  2 
COST    ACCOUNTING    PROCEDURE    IN    GENERAL 

The  function  of  this  assignment  is  to  present  a 
well-rounded  view  of  the  mechanism  with  which  cost 
accounting  operates  before  taking  up  the  detail  of 
procedure.  The  student  should  first  examine  care- 
fully the  table  of  contents  for  Parts  I  and  II  in  order 
to  get  a  proper  perspective  and  an  idea  of  the  rela- 
tion of  the  two  groups  of  chapters.  Then  Chapters 
III,  IV,  and  V  should  be  read  straight  through. 
After  this  first  general  reading,  go  back  and  study 
each  chapter,  section  by  section,  noting  what  each 
successive  step  in  the  procedure  contributes.  These 
chapters  should  be  read  again  after  finishing  Chapter 
XXIII,  to  make  sure  that  he  understands  clearly 
the  relation  between  the  steps  of  the  detail  technique. 

Routine  of  Cost  Accounting  (Chapter  III) 

This  is  a  chapter  of  details  from  which  emerges  the  impor- 
tant point  that  the  detailed  accounting  practice  varies  in  differ- 
ent plants,  even  in  the  same  line  of  industry. 


BUSINESS  ACCOUNTING— VOLUME  III  75 

Note  the  function  of  authorization  and  numbering  of  pro- 
duction and  standing  orders.  Study  the  contents  of  the  sample 
production  order  on  page  32.  A  knowledge  of  what  a  form 
should  contain  is  more  important  than  a  knowledge  of  its  arrange- 
ment, since  you  will  have  to  devise  forms  to  fit  the  circumstances 
in  each  individual  ''engagement"  you  undertake. 

Note  the  function  and  contents  of  the  material  requisition 
and  time  ticket.  Study  §  5  very  carefully.  Remember  that  costs 
other  than  prime  costs  are  distributed  first  to  departments  and 
then  to  products  passing  through  the  departments.  The  details 
of  such  distribution  through  the  medium  of  ''Expense  Distribu- 
tion Sheets"  will  be  explained  in  later  chapters.  Note  at  this 
time  the  contents  of  these  sheets,  the  sources  of  entries  therein, 
and  who  fills  them  out.  Since  all  costs  are  entered  and  sum- 
marized on  cost  sheets  in  a  jpb  order  factory,  they  should  be 
studied  with  care. 

Cost  Accounting  Methods — Simple  Products  (Chapter  IV) 
Summarize  the  steps  involved  in  calculating  the  unit  conver- 
sion cost.  The  job  order  and  process  methods  may  be  used  con- 
currently in  a  given  plant  as  described  in  §  5.  The  foundry  is  a 
familiar  illustration  of  the  job  cost  system. 

Cost  Accounting  Methods — Compound  Products  (Chap- 
ter V) 

Chapter  IV  dealt  with  the  job  cost  system  of  accounting  a. 
applied  to  products  which  require  only  one  class  of  raw  ma- 
terial. A  more  complex  procedure  which  is  needed  wlien  more 
than  one  class  of  material  is  involved  is  discussed  in  Chapter  V. 

Production  orders  not  only  authorize  production  but  also 
serve  sometimes  as  a  collecting  vehicle  for  costs  applicable  to 
the  order.     (See  §§  2  and  3.) 

Be  able  to  describe  the  three  copies  of  the  combined  produc- 
tion order  and  cost  sheet  (Form  8)  and  to  list  their  maiii  con- 


76  READING  GUIDE 

tents.     Study  the  three  purposes  of  coupon  orders.     Note  also 
how  production  can  be  traced  by  means  of  these  orders. 

Summarize  the  steps  in  scheduling  production  under  the 
coupon  order  method  of  production  (see  §  5).  Note  particularly 
the  function  of  the  "Day's  Work  Sheet.'' 

Study  the  different  reasons  for  charging  leather  to  shoes 
at  an  average  j^rice  rather  than  at  actual  cost.  Be  sure  to  get 
the  point  that  differences  between  actual  and  estimated  cost 
must  be  traced  and  accounted  for.  Write  out  the  technique  of 
the  "Loss  and  Gain  on  Estimate"  account.  Note  also  that  these 
differences  have  a  bearing  on  the  problem  of  fixing  a  selling 
price  and  the  problem  of  waste. 

In  connection  with  §  7  you  will  find  it  profitable  to  set  down 
the  advantages  and  disadvantages  of  estimating  systems  in  con- 
nection with  various  industries.     . 

•  In  §  8  the  main  point  is  the  reason  for  keeping  separate 
costs  for  the  component  parts  of  a  finished  product. 


Assignment  3 

RELATION   BETWEEN    GENERAL   LEDGER    AND 
COST    ACCOUNTS 

The  chief  purpose  of  this  assignment  is  to  em- 
phasize the  point  already  touched  in  Chapter  I,  that 
any  system  of  cost  records  must  ''tie  up"  with  the 
general  records,  and  that  the  tie-up  is  accomplished 
by  means  of  controlling  accounts.  It  is  absolutely 
impossible  to  control  costs  unless  thi^  is  done.  The 
student  should  review  in  this  connection  Volume  I, 
Chapter  XXIV,  and  apply  the  principles  there  pre- 
sented to  the  new  task  now  confronting  him. 


BUSINESS  ACCOUNTING— VOLUME  III  77 

The  correlation  of  controlling  accounts  with  sub- 
sidiary records  is  more  difficult  in  connection  with  a 
cost  system  than  in  connection  with  a  system  of  gen- 
eral accounts.  For  example,  the  tie-up  of  the  Raw 
Materials  controUing  account — a  cost  account — with 
stock  records  is  more  difficult  than  the  tie-up  of 
Accounts  Receivable — a  commercial  account — with 
the  customers  ledger. 

Financial  and  Cost  Accounts  (Chapter  VI) 

Inasmuch  as  general  ledger  and  cost  accounts  are  operated 
concurrently,  the  relation  between  the  two  must  now  be  clearly 
understood.  The  actual  tie-up  between  general  ledger  and  cost 
accounts  is  accomplished  by  controlling  accounts,  as  here  ex- 
plained. The  place  of  perpetual  inventories  in  tying  up  cost 
records  with  the  general  accounts  is  discussed  in  §§  4  and  6. 

You  should  be  able  to  explain  in  detail  the  arrangement  and 
functions  of  the  stores  ledger,  cost  ledger,  and  stock  ledger, 
since  these  are  three  of  the  most  important  records  in  any  cost 
system.  Since  the  cost  ledger  is  really  a  file  of  current  job 
sheets,  a  form  of  it  does  not  appear  here  because  it  was  dis- 
cussed in  Chapter  III. 

For  practice  work  on  this  chapter,  draw  up  three  skeleton 
ledger  accounts  with  hypothetical  figures  for  the  following  con- 
trolling accounts: 

1.  Stores 

2.  Work  in  Process 

3.  Finished  Goods 

You  should  in  no  event  proceed  with  your  reading  until  you 
thoroughly  understand  the  content  and  operation  of  the  above 
accounts — and  how  they  control  the  detailed  cost  records. 
Notice   also   that   the   amounts    in   tliese    accounts    are   checked 


78  READING  GUIDE 

against  physical  inventories  before  the  inventory  figures  to  be 
entered  in  the  balance  sheet  are  determined  upon. 

Entries  to  General  Ledger  Controlling  Accounts  (Chap- 
ter VII) 

In  this  chapter  the  detailed  technique  in  connection  with 
the  operation  of  the  general  ledger  controlling  accounts  is  ex- 
plained. In  some  places  the  technique  of  the  subsidiary  cost 
records  is  discussed  where  such  discussion  assists  in  understand- 
ing the  controlling  accounts. 

Study  particularly  in  §  1  the  method  of  charging  purchase 
to  the  Raw  Material  controlling  accounts  and  stock  records 
(subsidiary  records).  Notice  how  the  agreement  between  these 
two  classes  of  data  is  maintained,  and  that  inward  freight  is 
charged  to  both  of  the  above  classes  of  records. 

After  the  Raw  Material  account  the  controlling  account 
next  opened  and  operated  is  that  for  work  in  process.  The 
points  to  be  studied  in  this  connection  are: 

1.  The  items  that  make  up  the  account. 

2.  The  original  sources  from  which  these  items  come. 

3.  How    corresponding    entries    are    made    in    subsidiary 

records. 

Observe  that  the  items  in  each  Work  in  Process  account  con- 
sist of: 

1.  Inventories 

2.  Materials 

3.  Labor 

4.  Overhead 

Material  and  labor  can  be  charged  directly  to  Work  in  Process 
accounts,  but  overhead  is  distributed  to  departments,  work  in 
process,  and  cost  sheets  through  department  overhead  rates. 
The  detailed  technique  of  such  distribution  is  discussed  in  later 
chapters. 


BUSINESS  ACCOUNTING— VOLUME  III  jg 

The  next  controlling  account  to  be  used  is  the  Finished 
Goods  account.  Note  how  it  is  built  up.  Be  sure  to  remember 
that  sales  of  finished  goods  are  credited  to  Finished  Goods 
account  at  cost  rather  than  sales  price. 

Indirect  Expense  Account  (Chapter  VIII) 

Section  I  summarizes  the  steps  in  recording  indirect  expense. 
Since  books  are  usually  kept  on  an  accrual  basis,  all  expenses 
applicable  to  a  current  period  must  be  recorded  whether  or  not 
they  have  been  paid  in  cash.  Examples  of  such  expenses  dis- 
cussed in  §  2  are  depreciation,  rent,  insurance,  and  taxes.  Ex- 
penses may  be  prepaid.  These  expenses  are  of  two  kinds  (see 
§  3).     Study  the  method  of  booking  such  charges. 

Closing  the  Controlling  Cost  Accounts  (Chapter  IX) 

Study  the  journal  entries  which  affect  the  controlling  ac- 
counts. Note  the  points  of  divergence  between  the  job  order 
and  process  systems.  Without  reference  to  the  text,  draw  up 
similar  journal  entries,  using  hypothetical  figures. 

After  this  is  done,  balances  appear  in  certain  of  these 
accounts.  Be  able  to  name  these  accounts.  You  should  under- 
stand the  reason  for  the  absence  of  balances  in  the  non-produc- 
tive department  accounts,  and  the  method  of  adjusting  the  bal- 
ances in  the  productive  department  accounts. 


Assignment  4 

GENERAL  PROCEDURE  IN  ACCOUNTING  FOR 
MATERIALS 

This  assignment  discusses  with  some  detail  the 
first  principal  class  of  costs,  namely,  materials.  It 
should  be  studied  very  closely.    The  records  here  de- 


80  READING  GUIDE 

scribed — the  stock  record  in  particular — constitute  a 
portion  of  the  basic  records  in  a  cost  system. 

Accounting  for  stores  cannot  be  done  properly 
unless  there  is  a  proper  stores  organization  and  a 
proper  lay-out  for  the  stores  department.  It  is  an- 
other instance  of  the  close  relation  of  cost  accounting 
and  management  of  which  the  student  should  never 
lose  sight  in  his  work. 

To  handle  this  assignment  successfully  it  will  be 
well  to  review  not  merely  the  discussion  of  elements 
of  cost  in  Chapter  II,  but  also  the  discussion  of  pur- 
chasing stores  in  Volume  II,  Chapters  VIII  to  XIII. 

It  may  be  said,  however,  that  the  accounting  for 
direct  materials,  here  treated,  and  for  direct  labor, 
treated  in  Assignment  6,  will  prove  much  easier  to 
master  than  the  accounting  for  burden  to  be  dis- 
cussed further  on. 

Stores  and  the  Stores  Department  (Chapter  X) 

This  chapter  is  the  beginning  of  a  more  detailed  discussion 
of  cost  accounting.  It  considers  the  first  big  cost  of  a  manu- 
factured product,  namely,  materials  or  stores. 

Stores  Accounting  and  Records  (Chapter  XI) 

The  last  chapter  emphasized  the  needs  of  stores-rooms  and 
adequate  stock  records  for  the  control  of  stores.  This  chapter 
deals  with  the  accounting  and  records  for  stores. 

You  should  imderstand  the  reasons  (presented  in  §  2)  why 
close  accuracy  in  stores  accounting  must  be  insisted  on.  The 
technique  of  stock-recording  also  is  important.  Do  not  proceed 
in  your  study  until  you  have  mastered  it.  Note  that  stock  rec- 
ords usually  show  not  only  quantities  but  also  values  of  stores 


BUSINESS  ACCOUNTING— VOLUME  III  ot 

receipts,  issues,  and  balances  (§  3),  although  sometimes  only 
quantities  are  shown. 

After  studying  §  10,  close  your  book  and  write  out  the 
procedure  of  handling  issued  stores. 

The  main  points  to  remember  in  §  11  are: 

1.  The  technique  of  recording  material  returned  to  vendor. 

2.  The  two  records  made  for  material  returned  to  stores- 

rooms    from    the    factory,    namely,    stores    returned 
memos  and  stores  returned  book. 

Make  a  list  of  the  reasons  for  discrepancies  between  stores 
controlling  accounts  and  stores  records;  and  perpetual  inven- 
tories and  physical  inventories.  What  accounting  entries  are 
made  to  adjust  these  discrepancies.^ 


Assignment  5 

SPECIAL  FEATURES  IN  ACCOUNTING  FOR 
MATERIALS 

The  preceding  assignment  dealt  with  accounting 
for  stores  which  might  be  apphed  to  any  organization. 
This  assignment  treats  of  special  problems  which 
arise  in  accounting  for  materials  pecuHar  to  certain 
types  of  industries.  Almost  as  perplexing  at  times 
as  the  accounting  for  burden  is  the  handling  of  these 
special  problems  discussed  in  Chapter  XII.  For 
example,  the  matter  of  by-product  accounting  pre- 
sents an  extremely  difficult  point. 

The  student  should  allow  himself  plenty  of  time 
to  master  this  assignment,  studying  and  digesting  it 
through  patient  application  to  concrete  instances. 


82  READING  GUIDE 

A  thorough  understanding  of  the  matter  pre- 
sented here  will  not  only  give  you  a  ready  command 
of  the  technicalities  of  stock-recording,  but  will  also 
assist  you  materially  in  solving  problems  of  a  differ- 
ent sort. 

To  get  the  full  benefit  of  the  discussion  in  Chap- 
ter XIII,  you  might  well  try  your  hand  at  working 
out  a  classification  of  stores  for  one  or  two  industries 
with  which  you  are  familiar. 

Stores  Problems  (Chapter  XII) 

Two  points  are  emphasized  by  §2:  (1)  the  three  ways  of 
pricing  requisitions,  and  (2)  the  conditions  under  which  each 
one  of  the  three  methods  is  applicable.  Changes  in  the  weight 
or  volume  of  materials  after  purchase  must  be  considered  before 
charging  material  consumed.  The  methods  of  charging  in  such 
cases,  noted  in  §  3,  should  be  completely  understood. 

Wastes  of  materials  must  also  be  recorded,  and  prevented  if 
possible.  In  order  to  check  unnecessary  waste,  standards  of 
material  consumption  should  be  set.  The  importance  of  stand- 
ards not  only  of  material  consumption  but  also  of  labor  and 
burden  consumption  cannot  be  exaggerated  because  the  measure 
of  current  accomplishments  can  be  determined  in  no  other  way. 

In  §  5  note  the  function  of  the  spoilage  account,  and  the 
replacement  order.  Although  there  are  various  ways  of  treat- 
ing defective  and  spoiled  material,  such  material  is  usually 
handled  as  an  overhead  item. 

Note  that  the  accounting  for  scrap  "depends  on  whether  or 
not  the  scrap  is  of  sufficient  value  to  affect  appreciably  the  cost 
of  the  product.'' 

The  proper  accounting  for  by-products  depends  primarily 
on  the  nature  of  the  by-product  and  the  proportion  of  its  value 
to  the  main  product. 


BUSINESS   ACCOUNTING— VOLUME   III  gj 

Classification  of  Stores  (Chapter  XIII) 

In  §  1  note  the  reason  for  the  cost  accountant's  interest  in 
the  subject  of  stores  classification.  Stores  must  be  classified 
and  symbolized  in  some  way,  if  proper  cost  records  are  to  be 
kept.  The  necessity  for  this  and  its  advantages  are  discussed 
in  §§  2  and  3. 

After  reading  §  4,  see  whether  you  can  outline  the  steps  to 
be  followed  in  constructing  a  symbol  code.  Be  able  to  enumerate 
the  main  features  of  special  codes,  such  as  the  "block"  system 
and  the  Dewey  decimal  system,  §§5  and  6. 


Assignment  6 
LABOR  COSTS 

This  assignment  covers  the  second  of  the  prin- 
cipal groups  of  cost  items.  In  considering  labor  costs 
the  student  must  give  attention  to  the  Ihiuman  element 
involved.  Most  cost  accountants  attribute  a  large 
part  of  their  success  to  their  understanding  of  the 
human  element  in  the  problems  they  have  had  to  work 
out. 

Any  method  of  accounting  for  labor  depends,  to  a 
great  extent,  on  the  method  of  wage  payment. 
While  in  some  cases  it  may  not  be  the  function  of  the 
cost  accountant  to  select  the  method  of  wage  payment 
to  be  followed  in  the  organization,  he  should  be  fa- 
mihar  with  the  various  methods  so  as  to  account  prop- 
erly for  the  costs  involved. 

It  is  important  to  have  accurate  records  for  labor, 
not  merely  in  order  to  determine  labor  costs,  but  also 


g4  READING  GUIDE 

in  order  to  distribute  properly  the  cost  of  burden, 
when  the  method  of  distribution  is  by  direct  labor 
hours,  by  direct  labor  costs,  or  by  machine  hours. 

The  three  chapters  of  this  group  are  very  closely 
related;  one  record  of  the  series  here  described  serves 
as  the  basis  for  another.  The  student  should  keep  this 
close  relationship  firmly  in  mind  throughout  his 
study.  As  already  noted,  the  subject  of  direct  labor 
costs — like  that  of  direct  material  costs — is  much 
simpler  than  the  subject  of  indirect  costs  to  be  taken 
up  later.  Nevertheless,  the  subject  requires  close  and 
patient  attention,  and  the  student  should  allow  him- 
self plenty  of  time  for  his  work. 

Recording  the  Cost  of  Labor  (Chapter  XIV) 

The  first  important  point  for  you  to  note  is  the  dual  pur- 
pose of  labor  records  (see  §  2).  Note  in  a  general  way  the 
method  of  arriving  at  labor  costs  for  units  of  production. 

Notice  the  function  of  the  time  card  for  "in  and  out"  time, 
viz.,  to  record  the  time  the  worker  enters  and  leaves  the  factory. 
Keep  in  mind  that  this  record  does  not  show  any  labor  costs 
although  under  a  process  system  it  furnishes  the  basis  (time) 
for  the  calculation  of  wages. 

Since  the  pay-roll  is  such  an  important  labor  record,  it 
should  be  prepared  in  analyzed  form,  i.e.,  it  should  show  labor 
costs  classified  into   direct  and  indirect  labor  by   departments. 

Study  carefully  the  journal  entry  which  summarizes  the 
labor  costs  for  the  period  (§7). 

Time  and  Pay  Records  (Chapter  XV) 

Two  chief  cost  records  are  discussed  in  this  chapter,  viz., 
time  cards  and  pay-roll  records.     The  illustrative  forms  should 


BUSINESS  ACCOUNTING-VOLUME  III  gg 

be  studied  with  two  things  in  mind:    (1)  their  technical  use,  and 
(2)  their  advantages  and  disadvantages. 

Wage  System  (Chapter  XVI) 

The  following  are  the  chief  points  that  should  be  grasped  in 
this  chapter: 

1.  Method  of  calculating  labor  costs  under  the  different 

methods  of  wage  payment. 

2.  Where    each    system    is    applicable;    and    where    non- 

applicable. 

3.  The    main    points    of    difference    among    the    various 

methods. 


Assignment  7 
DISTRIBUTION  OF  INDIRECT  EXPENSES 

The  next  three  assignments  deal  with  the  most 
perplexing  problem  of  cost  accounting — the  record- 
ing and  distribution  of  indirect  expense. 

To  master  these  assignments  the  chapters  should 
be  read  again  and  again.  The  best  plan  would  be  for 
the  student  first  to  review  Chapter  VIII,  and  then  to 
read  Assignments  7,  8,  and  9  straight  through.  After 
that  he  should  try  to  outline  rather  broadly — with- 
out consulting  the  book — the  main  steps  involved  in 
the  calculation  and  application  of  indirect  expense. 
When  this  outline  is  completely  mastered,  the  student 
should  begin  with  Assignment  7  and  study  each  point 
slowly  and  carefully.    Great  effort  must  be  expended 


86  READING  GUIDE 

to  get  a  clear  understanding  of  all  the  records  dealing 
with  indirect  expense,  or  burden. 

Assignment  7  discusses  the  original  records  for 
indirect  expense.  The  student  will  remember  that 
the  matter  here  presented  was  referred  to  incidentally 
in  Volumes  I  and  II,  but  was  not  fully  treated.  The 
work  here,  therefore,  is  a  distinctly  new  development 
in  the  study.  The  intrinsic  difficulty  of  the  subject 
requires  your  utmost  alertness  and  attentiveness  of 
mind. 

Chapter  XVII  serves  as  a  general  introduction 
which  should  be  studied  and  digested  by  itself.  After 
that  the  items  to  be  entered  in  the  original  records  are 
grouped  in  three  main  divisions  which  are  covered 
respectively  in  Chapters  XVIII,  XIX,  and  XX. 
After  finishing  his  detailed  study  of  Chapter  XIX, 
the  student  should  test  his  understanding  of  the  sub- 
ject thus  far,  by  trying  to  draw  up  a  schedule  of  fixed 
charges  in  connection  with  a  business  with  which  he  is 
familiar. 

General  Considerations  of  Expense  (Chapter  XVII) 

No  feature  of  cost  accounting  is  more  difficult  than  the 
handling  of  indirect  expense^  so  you  will  have  to  read  and  reread 
the  chapters  in  this  part  in  order  to  understand  them  fully. 
Chapters  XXI  to  XXIII  should  be  studied  with  particular  care. 

Do  not  by  any  means  proceed  with  the  reading  of  Chapter 
XVII  beyond  the  first  paragraph  until  you  clearly  understand 
the  meaning  of  indirect  expense  (burden  or  overhead)  and  how 
it  differs  from  prime  cost.  It  may  be  necessary  to  refresh  your 
memory  by  reading  again  Chapter  II. 


BUSINESS  ACCOUNTING— VOLUME  III  37 

Note  in  §  1  the  reasons  for  lack  of  uniformity  in  handling 
expense. 

Study  Form  32 — showing  the  classification  of  expense  ac- 
counts. 

Before  reading  §  2,  be  sure  that  you  can  summarize  the 
steps  involved  in  the  distribution  of  expense.  You  will  not 
completely  understand  these  until  you  have  concluded  tlie  read- 
ing of  Part  VI,  but  at  this  point  you  should  at  least  have  in  mind 
the  steps  referred  to  above.  Keep  these  in  mind  as  you  read 
this  part  of  the  book,  particularly  the  last  three  chapters. 

Be  able  to  classify  expense  and  to  mention  the  records  on 
which  the  different  classifications  are  first  entered.  Make  a 
list  of  the  classes  of  invoices  entered  in  the  purchase  journal 
analysis.  Note  the  analytical  function  of  the  subsidiary  expense 
ledger  and  its  importance  as  an  aid  to  administration. 

Note  the  examples  and  treatment  of  functional  expense 
accounts.  Note  the  function  of  the  plant  ledger.  What  is  a 
controlling  account?  The  subject  of  depreciation  touched  on 
in  this  chapter  is  discussed  later  in  Chapter  XX  and  more  fully 
in  Volume  IV. 

Study  §  8  very  carefully.  Then  put  aside  the  book  and  make 
a  list  of  the  classes  of  expense,  and  the  original  factory  docu- 
ments where  expenses  are  entered.  Be  sure  that  you  under- 
stand the  significance  of  the  term  "departmentalization  of  ex- 
pense."    Summarize  the  three  aims  of  expense  distribution. 

Indirect  Labor  and  Supplies  (Chapter  XVIII) 

The  chief  point  to  get  in  §  1  is  that  indirect  factory  activities 

cannot  be  charged  direct  to  goods  or  orders.     Note  the  medium 

for  charging  these  activities,  viz.,  standing  orders. 

The  next  point  to  get  in  this  chapter  is  the  function  of  the 

standing  order  time  ticket   (§3)    and  tlie  circumstances  under 

which  it  is  used. 

Study  the  example  (Form  34)  of  the  numbering  of  sUnding 

orders.     Note  the  dual  advantage  of  such  numbering.     Be  sure 


88  READING  GUIDE 

that  you  understand  how  charges  are  made  to  standing  orders. 
Make  a  list  of  the  advantages  of  a  numerical  arrangement  of 
orders. 

Fixed  Charges — Rent,  Taxes,  Interest,  Etc.  (Chapter  XIX) 
Note  the  reason  for  terming  certain  expenses  *'fixed  charges.** 
The  next  point  to  understand  clearly  is  the  reason  for  using 
different  mechanisms  to  distribute  indirect  labor  and  supplies, 
and  fixed  charges.  Study  the  mechanism  for  the  latter  as 
indicated  by  Form  35. 

Make  a  sample  journal  entry  illustrating  a  current  charge 
for  a  fixed  charge.  Note  that  the  basis  for  distributing  fixed 
charges  to  the  different  departments  usually  varies. 

Depreciation  (Chapter  XX) 

The  chief  points  to  be  gained  from  a  reading  of  the  first 
three  sections  are :  ( 1 )  an  understanding  of  the  nature  of  depre- 
ciation and  obsolescence,  and  the  differences  between  the  two; 
and  (2)  a  realization  of  the  necessity  for  recording  both  of 
these  items  in  the  accounts. 

Note  that  the  depreciation  depends  on  a  number  of  variable 
causes.  The  problem  of  depreciation  is  closely  bound  up  with 
the  problem  of  valuation.  This  is  the  reason  for  the  author's 
point  that  the  cost  accountant,  as  such,  has  not  had  the  technical 
training  to  enable  him  to  measure  depreciation  accurately. 


Assignment  8 
DISTRIBUTION    OF    INDIRECT    EXPENSE 

After  the  indirect  expenses  have  been  entered  on 
the  original  records,  the  next  few  steps  involved  in 
handUng  them  are: 


•      BUSINESS  ACCOUNTING— VOLUME  III 

1.  To    decide    what    method    of    distribution 

should  be  used. 

2.  To  distribute  the  indirect  expenses  in  ac- 

cordance with  the  method  chosen. 

In  deciding  upon  the  method  of  distributing  indirect 
expense,  the  student  will  need  to  consider  carefully 
the  circumstances  under  which  the  different  methods 
apply. 

This  requires,  of  course,  a  thorough  knowledge  of 
the  methods  in  general  use,  namely:  the  productive 
hour  method;  the  percentage  of  Jabor  method;  and 
the  machine-rate  method.  The  other  methods  men- 
tioned in  the  chapter  are  used  only  to  a  limited  degree. 

The  distributing  medium  for  the  second  step  is  the 
expense  distribution  sheet.  The  method  of  adjusting 
differences  between  actual  indirect  expenses  incurred 
and  the  application  of  indirect  expenses  to  the  prod- 
uct by  means  of  burden  rates  should  receive  special 
attention. 

This  assignment  requires  even  more  time  to  mas- 
ter than  the  preceding.  It  is  probably  the  most  diffi- 
cult one  in  the  whole  volume  and  should  recefve  most 
serious  and  concentrated  attention. 

After  working  through  each  chapter,  the  student 
should  look  back  and  try  to  summarize  the  steps  in 
each  section  without  referring  to  the  book. 

Expense  Distribution  (Chapter  XXI) 

This  and  the  succeeding  two  chapters  have  to  do  with  the 
most   difficult   feature   of   cost   accounting — the   distribution   of 


90  READING  GUIDE 

indirect    expense.      Hence    they    must    be    studied — not    simply- 
read — with  great  care. 

Note  the  four  sources  of  entries  for  expenses.  Observe 
also: 

1.  That  expense  is  departmentalized. 

2.  That  all  expenses  are  collected  ultimately  in  productive 

department  accounts. 

3.  That  expense  is   applied  to   product  passing  through 

the  department  by  means  of  a  predetermined  rate. 

Be  sure  that  you  understand  how  expenses  of  non-productive 
departments  are  prorated  over  productive  departments.  Ex- 
amples of  such  expense  are:  (1)  general  and  administrative, 
(2)  stores,  and  (3)  power.  Observe  that  the  distribution  in- 
volves (1)  the  consideration  of  the  most  equitable  basis  under 
the  circumstances,  and  (2)  the  technique  of  distribution.  Do  not 
continue  your  study  until  you  fully  grasp  the  foregoing  points. 

Note  the  basis  and  technique  of  distributing  stores  expense 
directly  to  jobs,  rather  than  to  productive  departments  and  then 
to  jobs.     (For  further  details,  see  Chapter  XXIV.) 

Observe  in  §§  7  and  8  that  the  treatment  of  expense  under 
the  job  order  and  process  methods  varies  somewhat. 

Note  the  advantage  of  opening  expense  accounts  on  the 
ledger  for  non-productive  departments,  and  the  reason  for  an 
expense  account  for  each  operating  department  under  the  job 
order  method. 

The  treatment  of  differences  between  department  expense 
taken  from  the  distribution  sheet  and  department  burden  applied 
to  orders  is  explained  in  Chapter  XXII. 

Expense  Distribution   Over  Product    (Chapter  XXII) 

The  reason  for  averaging  expenses  under  the  process  method 
and  the  necessity  for  burden  rates  under  the  job  order  system 
should  be  clearly  understood  before  you  read  the  details  of  this 
chapter. 


BUSINESS  ACCOUNTING— VOLUME  III  g, 

Make  a  list  of  the  six  bases  for  burden  rates.  Two  of  these 
are  of  limited  application.  List  also  the  four  general  methods  of 
determining  and  distributing  overhead  rates.  Note  the  reasons 
for  the  prevalency  of  the  percentage  of  labor  metliod.  Be  sure 
you  understand  the  principle  upon  which  this  method  is  based. 
Study  the  example  which  illustrates  the  technique  of  this 
method. 

Make  a  list  of  the  conditions  that  should  exist  in  a  plant 
where  the  percentage  of  labor  method  is  applicable.  Study  the 
technique  and  the  conditions  under  which  tlie  sold-hour  method 
is  applicable.  Do  the  same  for  material  and  prime  cost  methods. 
Note  the  reasons  for  overhead  adjustments.  Study  the  tech- 
nique of  the  methods  of  handling  overhead  adjustments  and  the 
reasons.  Note  the  circumstances  under  which  each  method  is 
suitable. 


Assignment  9 
MACHINE-HOUR  RATES 

Machine-hour  rates,  which  were  briefly  mentioned 
in  the  preceding  assignment,  are  here  given  detailed 
treatment.  The  use  of  machine-hour  rates  is  the  most 
highly  specialized  method  of  distributing  indirect  ex- 
pense. It  is  chiefly  applicable  when  the  large  majority 
of  the  operations  of  a  business  are  machine  opera- 
tions, particularly  automatic  machines. 

Make  a  list  of  the  steps  involved  in  the  use  of  this 
method.  One  special  feature  of  the  burden  distribu- 
tion peculiar  to  this  plan  is  the  use  of  supplementary 
rates  in  connection  with  idle  machine  time.  It  is  im- 
portant to  grasp  the  significance  of  the  division  of  tlie 


92  READING  GUIDE 

plant  into  production  centers  as  a  prerequisite  to  the 
installation  of  the  method. 

The  student  should  allow  plenty  of  time  for  this 
assignment.  After  completing  it  he  should  once 
more  read  over  Assignments  7,  8,  and  9. 

Machine-Hour  Rates  (Chapter  XXIII) 

This  chapter  deals  with  a  highly  specialized  method  of 
burden  distribution,  which,  however,  is  the  same  in  broad  out- 
line as  the  other  distributing  methods  already  discussed. 

Three  chief  points  are  made  in  §  1 : 

1.  The  circumstances  suitable  to  the  use  of  machine  rates. 

2.  The  meaning  of  production  center. 

3.  The    determination    of    overhead    for    each    production 

center. 

Make  an  outline  of  the  steps  involved  in  computing  the  ma- 
chine rate.  Study  the  bases  and  technique  of  distributing  items 
such  as  building  expense  or  rent,  power,  depreciation,  insurance, 
taxes,  tools,  repairs,  administrative,  and  sundry  expenses  to  pro- 
duction centers.  Study  with  care  the  example  which  shows  the 
calculation  of  the  hourly  rate  for  six  machines. 

Three  chief  points  are  made  in  the  rest  of  this  chapter: 

1.  Account  content. 

2.  Use  of  machine  expense  account. 

3.  Reasons  for  the  accuracy  of  machine  rates  as  a  method 

of  distributing  expenses. 


Assignment  10 
JOB  ORDER  COST  SYSTEM 

Reference  has  been  made  in  Chapter  I,  §§  10  and 
11,  and  in  Chapters  IV  and  V,  to  the  three  main 


BUSINESS   ACCOUNTING— VOLUME  III 


98 


types  of  cost  systems.  The  next  three  assignments 
take  them  up  in  detail. 

The  first  two  systems — the  job  order  system  and 
the  process  system — are  often  operated  concurrently 
in  the  same  plant.  The  student  should  note  the  rea- 
sons for  this,  as  stated  in  Chapters  XXIV  and  XXV. 

This  assignment  and  the  next  one  require  plenty 
of  time  for  digesting,  inasmuch  as  they  constitute  an 
actual  working  outline  by  which  the  cost  accountant 
is  to  be  guided  in  handling  a  specific  engagement. 
While  the  forms  and  records  here  described  cannot 
be  applied  in  their  entirety  to  evel*y  business,  their 
main  features  are  of  general  application.  Merely 
reading  these  assignments  will  not  carry  the  student 
very  far  toward  practical  command  of  the  informa- 
tion. He  should  try  to  see  the  concrete  application 
of  the  forms  and  records  to  some  plant  known  to  him. 

Of  this  group  of  assignments,  the  first  one  should 
receive  the  fullest  consideration,  inasmuch  as  the  job 
order  cost  system  is  probably  the  most  widely  used. 
It  is  the  individual  job  order  around  which  the  costs, 
shown  on  cost  sheets,  are  assembled,  although  sum- 
maries are  made  of  the  costs  of  various  jobs.  Par- 
ticular attention  should  be  given  to  the  journal  en- 
tries which  build  up  the  ledger  accounts  necessary  in 
the  operation  of  this  system. 

Production-Center  Job  Order  Cost  System  (Chapter  XXIV) 

This  volume  up  to  the  present  part  has  dealt  with  general 
and  specific  cost  accounting  technique  in  job  order  and  procces* 


94  READING  GUIDE 

systems,  with  occasional  references  to  special  industries.  Each 
chapter  in  Part  VII  is  a  sustained  elaboration  of  some  specific 
system. 

This  chapter  treats  chiefly  of  the  machine-rate  method  of 
distributing  burden  in  a  job  order  cost  system.  The  general 
principles  of  machines  rates  were  laid  down  in  the  preceding 
chapter. 

In  §  2  note  the  meaning  of  the  term  "production  center'* 
and  the  relation  of  production  centers  to  the  machine-rate 
method  of  distributing  burden. 

Study  particularly  Form  41.  The  function  of  the  stock  list 
should  be  clearly  understood  since  its  use  reduces  considerably 
the  amount  of  clerical  work.' 

With  respect  to  cost  of  material,  labor,  and  expense,  study 
the  following  points: 

1.  Records 

2.  Number  of  records  made  out 

3.  Persons  who  make   records 

4.  Use  and  disposition  of  records 

Study  carefully  the  chart  of  cost  accounts  (Form  43). 
After  studying  the  journal  entries  and  the  accounts  to  which 
they  lead,  see  whether  you  can  frame  similar  journal  entries  in 
the  proper  chronological  order  and  can  trace  the  relations  be- 
tween items  in  the  ledger  accounts. 


Assignment  11 
THE  PROCESS  SYSTEM 

The  second  main  type  of  cost  systems,  known  as 
the  process  system,  is  discussed  here,  with  particular 
reference  to  clay  products. 


BUSINESS   ACCOUNTING— VOLUME  III  95 

In  reading  this  assignment  the  student  should  not 
spend  too  much  time  in  trying  to  remember  the  con- 
tent and  uses  of  the  forms  and  records  described,  to 
the  neglect  of  the  understanding  of  the  principles  and 
the  sahent  features  of  process  systems  generally. 

The  main  point  of  difference  between  the  process 
system  and  the  job  order  system,  which  should  be 
clearly  grasped,  is  that  in  the  job  order  system  the 
product  goes  through  in  well-defined  lots,  the  costs 
being  kept  for  each  lot,  while  in  the  process  system 
costs  are  kept  by  batches  for  the  different  processes 
and  operations.  In  other  words,  the  unit  for  the 
compilation  of  costs  in  the  two  systems  is  the  job  and 
the  process  respectively.  In  fact,  it  is  the  unit  idea 
that  differentiates  cost  accounting  from  general  or 
commercial  accounting. 

Process  Cost  System — Clay  Products  (Chapter  XXV) 

The  first  main  point  to  get  in  this  chapter  is  the  principle  of 
segregating  costs  under  the  process  system.  Then  note  the 
function  and  use  of  department  accounts,  time  slips,  brick-setting 
report,  and  other  records,  especially  the  cost  ledger  at  the  end  of 
the  chapter.  The  foregoing  records  concern  the  kinds  and  quan- 
tities of  brick  produced. 


Assignment  12 
ESTIMATED    COSTS 


No   student   of   cost   accounting   should    fail   to 
understand  the  main  features  and  the  technique  of  an 


96  READING  GUIDE 

estimated  cost  system.  Such  a  system  has  a  very 
wide  range  of  use.  Even  in  the  job  order  and  process 
systems  a  certain  amount  of  cost  estimating  is  done; 
for  example,  in  the  predetermination  of  departmental 
burden  rates.  Cost  estimates  of  any  kind,  however, 
must  always  be  checked  against  actual  costs,  so  as  to 
bring  the  books  into  harmony  with  the  facts,  and  to 
aid  in  making  more  correct  estimates  for  the  future. 
In  this  assignment  particular  attention  should  be 
given  to  the  journal  entries  and  the  skeleton  ledger 
accounts. 

Estimated  Costs  (Chapter  XXVI) 

Three  types  of  cost  systems  are  discussed  in  this  volume — 
job  order,  process,  and  estimating.  The  former  two  have  been 
discussed  in  connection  with  the  application  of  cost  principles. 
The  estimating  system  has  been  touched  on  in  §§6  and  7  of 
Chapter  V,  and  the  estimating  of  material  has  been  described 
in  parts  of  Chapter  XII,  particularly  §  8.  Read  these  sections 
before  studying  this  chapter. 

In  §§  1,  2,  3,  4,  and  12,  study  the  nature,  merits,  limitations, 
and  principles  of  the  estimating  system. 

Note  in  §  5  the  importance  of  standards  in  controlling 
costs. 

The  technique  of  calculating  and  journalizing  the  following 
should  be  clearly  understood: 

1.  Opening  inventory 

2.  Current  transactions 

3.  Closing  inventory 

4.  Cost  of  goods  sold 

5.  Adjustments 

6.  General  ledger  account 


BUSINESS  ACCOUNTING— VOLUME  III  ^ 

Assignment  13 
TEXTILE    COSTS 

The  student  has  now  traversed  the  whole  field  of 
the  theory  and  technique  of  cost  accounting.  These 
final  chapters  offer  additional  material  of  a  more  con- 
crete nature  by  which  he  may  see  the  actual  working 
in  specific  instances  of  the  principles  already  set 
forth. 

The  study  of  these  chapters  will  reinforce  the 
point  already  urged,  that  the  planning  and  installa- 
tion of  a  cost  system  in  any  plant  must  always  be  pre- 
ceded by  a  careful  study  of  the  operations  of  the 
plant. 

The  content  of  this  assignment  may  appear  at 
first  diflScult,  but  it  will  be  found  on  close  reading  to 
be  relatively  simple.  Two  types  of  systems  are  in- 
volved, the  job  order,  and  the  process  system. 

Textile  Costs — Manufacture  of  Yarn  (Chapter  XXVII) 
Study  §§2  to  5^  which  deal  with  the  operations  in  a  textile 

mill,  so  that  you  can  better  understand  their  accounting  technique. 
Textile  costs  are  explained  with  slight  reference  to  forma 

but  with  detailed  reference  to  certain  accounts.     The  content  and 

operation  of  these  accounts  and  tables  should  be  understood: 

1.  Materials  and  Supplies 

2.  Waste 

3.  Stock  in  Process  in  Dye  House 

4.  Mixes  in  Process 
6.  Cost  of  Mixes 

6.  Yarn  in  Process 

7.  Conversion  Cost 


98  READING  GUIDE 

Weaving  and  Knitting  (Chapter  XXVIII) 

This  chapter  continues  the  discussion  of  textile  costs,  par- 
ticularly the  cost  of  weaving  cloth  and  knitting  fabrics.  The 
chief  points  to  be  gained  are  a  knowledge  of  the  content  and 
disposition  of  the  following  accounts: 

1.  Weaving 

2.  Knitting 

3.  Wet  and  Dry  Finishing 

4.  Finished  Cloth 

In  operating  the  foregoing  accounts  two  chief  problems 
arise,   namely,  the   apportionment   over   the   different   styles   of: 

1.  The  cost  of  weaving  during  the  period. 

2.  The  cost  of  production  of  the  wet  and  dry  finishing 

departments. 

Textile  Cost — General  Expense  (Chapter  XXIX) 

The  preceding  chapter  discussed  the  costs  of  operating  de- 
partments. This  chapter  deals  with  expense  accounts  which  are 
distributed  to  departments.  With  respect  to  these  expense  ac- 
counts study  the  following  points : 

1.  Content. 

2.  Disposition  of  shipping  expense,  which  you  will  note 

differs  from  disposition  of  other  expense  accounts. 

3.  Schedules  of  distribution  when  given,  particularly  the 

basis  of  distribution. 


Assignment  14 
GRAPHIC    PRESENTATION    OF    DATA 

The  final  chapter  differs  from  most  of  the  others 
of  the  volmne,  in  that  it  is  concerned  with  the  form 


BUSINESS  ACCOUNTING^-yotl/MKlHr;  I';  :•  ;  ..99^ 

of  presentation,  whereas  the  other  chapters  were  con- 
cerned primarily  with  the  calculation  and  compilation 
of  cost  data. 

Cost  data  is  practically  valueless  unless  so  pre- 
sented that  it  admits  of  ready  interpretation  and  com- 
parison. It  must  be  usable.  Inasmuch  as  the  impres- 
sions which  we  register  most  vividly  come  through 
the  sense  of  sight,  graphic  presentation  is  particularly 
helpful.  By  this  means  executives,  without  having  to 
wade  through  huge  columns  of  figures,  are  able  to 
grasp  the  significance  of  the  history  of  their  enter- 
prise as  reflected  in  the  cost  data,  and  can  thus  con- 
centrate upon  the  formulation  of  policies. 

Use  of  Graphic  Charts  (Chapter  XXX) 

The  author  fittingly  closes  his  book  with  a  discussion  of 
graphic  charts  as  an  aid  to  executives.  The  chief  point  in  §  1 
is  the  advantage  of  graphs  as  a  method  of  succinctly  presenting 
cost  data. 

With  respect  to  '^difference''  and  ratio  charts,  note  the  fol- 
lowing points: 

1.  Function 

2.  Content 

3.  Deductions  to  be  drawn 
4},  Limitations 

5.  Method  of  preparation 

6.  Use 

7.  Illustrations 


f 


Volume  IV 
Advanced  and  Analytical  Accounting 


ASSIGNMENTS  FOR  VOLUME  IV 

Assignment  1 
ADJUSTING    ENTRIES 

The  three  chapters  in  this  assignment  cover  those 
special  problems  which  are  likely  to  arise  when  the 
books  are  closed.  Here  the  subject  is  treated  in 
much  greater  detail  than  in  Volume  I,  Chapters  VII 
to  IX  and  Chapter  XXX.  Special  consideration 
is  given  to  the  various  methods  of  handling  deferred 
and  accrued  items. 

The  Scope  of  Advanced  Accounting  (Chapter  I) 

This  chapter  contains  a  bird's-eye  view  of  those  phases  of 
accounting  work  which  are  usually  supervised  by  the  head 
accountant  who  is  in  charge  of  the  routine  work  done  by  the 
bookkeepers  of  a  large  organization.  The  chapter  as  a  whole 
gives  the  reader  some  conception  of  the  nature  of  the  problems 
to  be  discussed  in  following  chapters.  Special  attention  is 
called  to  §  3,  which  summarizes  the  difference  between  ordinary 
accounting  and  accurate  accounting. 

Deferred  Debits  and  Credits  (Chapters  II  and  III) 

The  mental  confusion  that  is  often  caused  by  the  different 
significations  of  the  terms  "deferred"  and  "accrued,"  depending 
upon  which  side  of  the  balance  sheet  they  refer  to,  may  be 
cleared  up  by  the  careful  study  of  §§  1,  2,  8,  and  9,  Chapter  II. 
In  general  it  may  be  said  that  these  two  chapters  cover  ordinary 
bookkeeping  procedure  with  which  the  accountant  sliould  be 
familiar.     With  the  exception  of  the  sections  noted  above,  the 

103 


104  READING  GUIDE 

theory   and   principles    involved   have   been    fully    explained   in 
Volume  I,  Chapter  VIII;  §§  5  to  7. 


Assignment  2 
CLOSING   PROBLEMS 

This  assignment  covers  some  of  the  most  debata- 
ble questions  and  problems  that  arise  in  the  whole 
field  of  accountancy.  Most  of  these  problems  have  a 
legal  aspect  to  which  careful  attention  should  be 
given.  The  method  of  approaching  the  profits  of  a 
corporation  is  circumscribed  by  both  legal  rulings  and 
correct  accounting  procedure,  and  the  general  tenor 
of  the  information  in  this  assignment  is  to  acquaint 
the  student  with  both  aspects  of  the  subject. 

Profit  Determination  (Chapter  IV) 

The  definitions  in  this  chapter  need  careful  study.  The 
discussion  involves  much  important  accounting  theory,  a  knowl- 
edge of  which  is  fundamental  to  the  drawing  up  of  a  profit  and 
loss  statement  for  a  manufacturing  concern.  No  particular  part 
of  the  chapter  can  be  singled  out  as  containing  more  vital  infor- 
mation than  any  other.  Every  section  needs  close  attention, 
and  the  summary  of  the  principles  at  the  end  of  the  chapter  is 
well  worth  memorizing. 

Corporate  Dividends  (Chapters  V  and  VI) 

Most  of  the  theory  in  Chapter  V  is  based  on  legal  rulings 
with  which  the  accountant  is  expected  to  be  familiar.  Section 
4  discusses  a  matter  which  is  more  or  less  debated.  Further 
information  incidental  thereto  is  given  in  many  of  the  chapters 


BUSINESS  ACCOUNTING— VOLUME  IV  |05 

which  follow.  Chapter  V  covers  the  theoretical  aspect  of  the 
subject,  and  Chapter  VI  the  practical  accounting  work.  If  the 
theory  in  Chapter  V  is  thoroughly  mastered,  no  difficulty  will  be 
experienced  in  applying  this  theory  in  practice.  Practice  work 
on  the  problems  in  Volume  V  will  gradually  enable  the  student 
to  acquire  facility  in  journalizing  the  entries  to  be  made  on  the 
books. 

Surplus  (Chapter  VII) 

When  the  theory  of  profit  determination  has  been  mastered, 
no  difficulty  will  be  experienced  in  grasping  the  theory  of  sur- 
plus and  Surplus  account.  As  a  means  of  testing  the  thorough- 
ness of  the  student*s  knowledge,  attention  is  again  called  to 
the  utility  of  the  review  questions  at  the  end  of  each  chapter. 
The  answers  to  these  questions  should  not  only  be  mentally 
formulated  but  should  be  actually  written  and  then  compared 
with  the  discussion  in  the  text.  Especially  valuable  are  the 
questions  calling  for  a  certain  amount  of  practice  work  such  as 
Review  Question  6  (page  94)  and  Review  Question  2  (page 
103).  If  the  student  can  set  up  the  Surplus  account  in  the 
prescribed  and  correct  form  as  here  instructed,  he  may  be  as- 
sumed to  possess  a  thorough  working  knowledge  of  the  theory 
in  this  chapter. 

Reserves  and  Funds  (Chapter  VIII) 

In  no  other  respect,  perhaps,  does  accounting  practice  differ 
so  as  it  does  in  the  treatment  of  reserves.  It  is  suggested  that 
the  reader  study  the  theory  in  the  present  chapter  closely,  in 
order  to  become  thoroughly  conversant  with  the  thread  of  uni- 
formity that  runs  through  these  divergences  in  practice.  How- 
ever practice  may  differ,  the  theory  remains  the  same  and  a 
thorough  grasp  of  principles  will  insure  correct  methods  of 
recording  data  in  the  accounts  on  the  books.  As  an  aid  to  the 
memorizing  of  theory,  it  is  suggested  that  at  the  second  or  third 
reading  the  student  should  work  out  the  examples  in  the  text 


106  READING   GUIDE 

without  reference  to  the  solution.  Thus,  on  page  116  two  bal- 
ance sheets  are  shown,  the  second  being  a  solution  to  the  problem 
propounded  in  the  first.  The  student  should  work  out  this  solu- 
tion for  himself  and  then  compare  with  the  text. 

Valuable  practice  work  covering  the  information  given  in  the 
first  part  of  this  volume  will  be  furnished  by  working  through 
Problems  46  and  47  of  Volume  V, 


Assignment  3 
BONDS  AND  SINKING  FUNDS 

This  group  of  chapters  covers  the  procedure  in 
recording  deahngs  in  bonds  and  the  method  of  com- 
puting an  annuity  for  the  purpose  of  creating  a  sink- 
ing fund.  Under  compKcated  conditions  this  phase 
of  accounting  work  is  usually  handled  by  a  man  who 
is  a  specialist  in  his  line.  The  information  in  the  three 
following  chapters  is  sufficient  to  give  the  reader 
a  thorough  working  knowledge  covering  ordinary 
transactions  in  bonds  and  sinking  funds. 

Bonds  and  Accounting  for  Bonds  (Chapters  IX  and  X) 

Most  business  men  know  something  about  bonds  and  are 
conversant  with  the  ordinary  commercial  methods  of  determining 
their  value.  The  attention  of  the  student  who  does  not  possess 
this  knowledge  is  directed  to  the  study  of  §  4,  Chapter  IX. 
This  information  is  fundamental  to  the  correct  recording  of 
bond  values  on  the  books. 

Sections  5  to  7,  Chapter  IX,  present  some  puzzling  features 
of  bond  interest^  the  mastery  of  which  will  demand  concentrated 


BUSINESS  ACCOUNTING-VOLUME  IV  jq^ 

application  supplemented  by  the  practice  work  afforded  by  the 
problems  in  Volume  V.  Preliminary  to  this  more  difficult  prac- 
tice, it  is  suggested  that  the  table  on  page  131  be  set  up  from 
the  data  given  on  page  129.  The  accountancy  work  in  connec- 
tion with  the  recording  of  bond  orders  and  issues  on  the  books 
calls  for  no  special  comment,  and  a  careful  study  of  the  text  is 
all  that  is  required  to  obtain  a  working  knowledge  of  the  sub- 
ject. 

Sinking  Funds  and  Annuities  (Chapter  XI) 

To  the  reader  whose  mind  has  not  a  natural  mathematical 
bent,  the  mastery  of  the  theory  of  annuity  computations  will 
prove  to  be  the  most  difficult  of  arithmetical  problems  met  with 
in  accounting  work.  Attention  in  particular  is  drawn  to  the 
difference  between  the  amount  of  an  annuity  and  the  present 
worth  of  an  annuity.  The  crux  of  this  difficult  subject  lies  here 
(see  §§5  and  6).  To  distinguish  clearly  between  the  two 
methods  of  calculation,  it  is  suggested  that  the  illustrative  ex- 
amples in  both  sections  be  worked  out  several  times  until  the 
difference  between  the  two  methods  is  clearly  fixed  in  the  mind 
of  the  student. 

While  in  actual  practice  the  occasion  for  computing  annui- 
ties may  rarely  arise,  every  student  who  aspires  to  be  an  account- 
ant should  be  capable  of  solving  these  elementary  problems  of 
the  mathematics  of  investment. 

Do  not  try  to  master  the  contents  of  this  chapter  rapidly. 
Be  prepared  to  experience  some  mental  confusion  at  first.  This 
will  gradually  vanish  after  the  illustrative  examples  are  repeat- 
edly worked  out  and  one  by  one  each  detail  is  fixed  in  mind. 
Also  go  over  the  series  of  questions  and  write  answers  to  them, 
not  once,  but  several  times. 

As  advanced  practice  work  on  the  difficult  subject  of  annui- 
ties and  the  method  of  their  computation  and  accounting,  the 
reader  should  study  and  work  over  problems  48  to  53. 


108  READING  GUIDE 

Assignment  4 
DEPRECIATION  PROBLEMS 

The  two  chapters  in  this  assignment  contain  in- 
formation of  a  more  advanced  character  than  that 
given  in  Volumes  I  and  II.  They  cover  the  require- 
ments of  a  thorough  working  knowledge  of  the  sub- 
jects applicable  to  all  ordinary  business  and  account- 
ing practice. 

Depreciation — Rates  and  Accounting   (Chapters  XII   and 
XIII) 

As  further  practice  in  the  computation  of  annuities,  the 
readers  should  work  out  the  problem  given  in  the  second  para- 
graph of  §  9,  Chapter  XII,  and  from  the  data  of  the  problem 
construct  the  table  shown  on  page  176.  The  other  methods  of 
calculating  the  depreciation  charge  present  no  difficulty. 

To  acquire  facility  in  the  journalization  of  depreciation 
charges,  it  is  suggested  that  after  a  careful  study  of  the  illus- 
trative problem  in  §  6,  Chapter  XIII,  the  transactions  be  jour- 
nalized and  posted  to  their  ledger  accounts,  the  student  then 
comparing  his  work  with  the  ledger  entries  in  §  7.  It  cannot  be 
emphasized  too  frequently  that  this  sort  of  practice  work  is 
essential  if  theory  is  to  be  mastered. 

Problems  8,  9,  10,  and  54  take  up  the  more  difficult  entries 
that  arise  in  handling  the  depreciation  factor  and  are  to  be 
studied  after  the  more  simple  practice  work  has  been  mastered. 


Assignment  5 
CORPORATION  ACCOUNTING 

The  special  features  of  corporation  accounting 
which  relate  to  issuing  and  recording  shares  of  stock 


BUSINESS  ACCOUNTING— VOLUME  IV  1Q9 

are  here  covered  in  sufficient  detail  to  furnish  a  work- 
ing knowledge  of  the  procedure  in  opening  the  books 
of  a  corporation. 

Capital  Stock  Issues  (Chapter  XIV) 

Before  beginning  the  study  of  this  chapter,  turn  back  to 
first  principles  and  refresh  the  memory  by  rereading  Chapter 
XXXIII  of  Volume  I. 

Practice  varies  in  the  recording  of  stock  issues.  The  jour- 
nal entries  here  given  to  illustrate  the  procedure  are  those  which 
conform  to  the  theory  of  accounts;  that  is,  in  every  case  there 
is  a  reason  why  the  entries  should  be  made  in  the  form  in  which 
they  are  made.  When  this  reason  is  formulated  in  the  student's 
mind,  the  particular  journal  entry  will  naturally  suggest  itself 
to   him. 

Where  illustrations  are  given,  as  in  §  2,  the  student  should 
cover  up  the  journal  entries  given  below  the  illustration  and 
write  them  out  for  himself.  This  practice,  repeated  two  or 
three  times,  will  give  him  a  complete  mastery  of  the  contents  of 
this  chapter. 

Premiums  and  Discounts  (Chapter  XV) 

The  same  observations  apply  to  the  study  of  this  chapter  as 
apply  to  the  preceding  cne.  For  example,  work  out  the  journal 
entries  in  §§  4  to  7,  and  9  in  the  way  previously  suggested,  and 
repeat  the  practice  until  the  required  entries  can  be  made  with- 
out hesitancy.  Go  over  the  review  questions  in  both  chapters 
and  do  not  take  up  the  next  assignment  until  all  questions  can  be 
answered  fully  and  correctly. 

Problems  55  to  57  of  Volume  V  cover  most  phases  of  the 
theory  of  premium  and  discount  taken  up  in  this  part  of 
Volume  IV  and  they  should  be  worked  out  in  conjunction  with 
a  very  careful  study  of  the  different  phases  of  the  theory 
embodied  in  this  assignment. 


110  READING  GUIDE 

Assignment  6 

CAPITAL  ASSET  VALUATIONS 

The  two  chapters  deahng  with  the  valuation  of 
current  and  fixed  assets  cover  many  important  points 
of  theory  and  procedure,  a  knowledge  of  which  is 
necessary  for  a  correct  statement  of  asset  values  at 
the  close  of  a  fiscal  period. 

Current  Assets  (Chapter  XVI) 

The  principles  which  govern  the  valuation  of  accounts  receiv- 
able and  inventories  are  fundamental  to  sound  accounting,  and 
particular  attention  should  be  paid  to  the  theory  of  the  subject. 
If  this  is  clearly  understood  and  remembered,  the  correct  book- 
keeping procedure  will  suggest  itself.  The  arguments  for  and 
against  a  given  method  of  procedure  and  the  conditions  under 
which  one  of  two  possible  courses  is  preferable  should  be  noted. 

Fixed  Assets  (Chapter  XVII) 

The  correct  valuation  of  fixed  assets  depends  first  upon  the 
principles  explained  in  this  chapter,  and  second  upon  the  ade- 
quacy and  truth  of  the  depreciation  policy.  When  machinery 
and  equipment  represent  a  big  investment,  the  accountant's  work 
will  be  limited  to  recording  on  the  books  the  valuations  of  the 
fixed  assets  as  determined  by  the  depreciation  ratio  in  use. 


Assignment  7 
APPRAISAL  PROBLEMS 

The  points  taken  up  in  this  assignment  of  three 
chapters  cover  further  phases  of  the  principles  and 


BUSINESS  ACCOUNTING— VOLUME  IV  m 

problems  of  valuation,  including  the  subject  of  fire 
loss  adjustments. 

Liabilities  (Chapter  XVIII) 

The  information  in  this  chapter  is  of  a  simple  character  and 
no  difficulty  will  be  experienced  in  mastering  the  points  of  theory 
involved.  The  accounting  procedure  illustrated  in  §§  4  to  7  is 
self-explanatory,  and  suggests  itself  when  the  theory  which 
governs  the  recording  of  liabilities  on  the  books  has  been  nias- 
tered. 

•Intangible  Assets  (Chapter  XIX) 

Study  the  theory  of  this  chapter  carefully.  In  the  valuation 
of  the  intangible  assets  the  point  of  view  of  the  management  of 
a  business  is  not  always  that  of  the  accountant.  It  is  the  duty 
of  the  accountant,  so  far  as  he  is  permitted  to  do  so,  to  state 
the  values  of  the  assets  on  the  books  at  a  figure  which  cannot 
be  criticized  on  the  score  of  exaggeration.  To  determine  this 
figure  he  must  be  thoroughly  conversant  with  the  principles 
which  govern  the  valuation  of  assets.  Therefore,  give  ample 
time  to  the  study  of  Chapters  XVI,  XVII,  and  XIX,  and  do  not 
consider  that  you  have  assimilated  their  contents  until  answers 
to  the  review  questions  come  readily  to  mind. 

Fire  Loss  Adjustments  (Chapter  XX) 

After  studying  this  chapter  until  its  theory  is  mastered,  work 
out  the  journal  entries  from  the  data  given  in  §  9,  and  construct 
the  accounts  to  which  these  entries  are  posted.  This  practice 
work,  repeated  two  or  three  times,  will  fix  in  mind  the  general 
procedure  in  adjusting  fire  losses  and  other  types  of  losses  that 
are  found  on  the  books. 

•      Problems  54  to  56  of  Volume  V  furnish  practice  work  on 
the  chapters  in  this  assignment. 


112  READING  GUIDE 

Assignment  8 
FINANCIAL   STATEMENTS 

The  four  chapters  in  this  group  discuss  the  dif- 
ferent forms  of  the  financial  statements  and  the  rea- 
sons for  variations. 

The  Balance  Sheet  (Chapter  XXI) 

The  accounting  procedure  in  this  chapter,  so  far  as  concerns 
the  form  of  presentation,  is  that  which  has  the  sanction  of  gen- 
eral adoption  and  that  which  is  recommended  by  the  Federal 
Reserve  Board.  When  opportunity  offers,  study  the  balance 
sheets  printed  in  the  financial  papers  or  issued  from  time  to  time 
as  part  of  the  prospectuses  of  corporations.  Try  to  criticize  the 
contents  of  such  a  balance  sheet;  that  is,  reason  out  for  your- 
self in  what  respects  it  fails  to  give  information  which  you  or 
an  investor  would  like  to  know;  or  in  what  respects  the  figures 
show  a  sound  financial  condition  or  the  reverse;  and  so  on. 

The  Profit  and  Loss  Statement  (Chapter  XXII) 

The  same  observations  apply  to  this  chapter  as  to  Chap- 
ter XXI.  In  working  out  those  problems  in  Volume  V  which 
involve  drawing  up  the  financial  statements,  construct  these 
statements  according  to  the  methods  described  in  these  chapters. 
In  this  way  you  will  acquire  facility  in  following  the  correct 
procedure.  The  proper  method  of  compiling  statements  so  as 
to  present  the  information  in  a  professionally  correct  form  is 
wholly  a  matter  of  practice,  combined  with  an  understanding 
of  the  reasons  for  the  adoption  of  a  particular  form. 

Manufacturing    and    Mercantile    Statements     (Chapters 

XXIII  AND  XXIV) 
To  commit  to  memory  the  procedure  in  these  two  chapters 
without  a  certain  amount  of  practice  work  is  impossible.    To  this 


BUSINESS  ACCOUNTING— VOLUME  IV  113 

end  it  is  suggested  that  the  .trial  balances  be  reconstructed  from 
the  financial  statements,  and  then  the  attempt  be  made  to  draw 
up  the  statements  in  the  form  given.  This  work  will  need  to  be 
repeated  several  times  before  accuracy  is  attained. 


Assignment  9 
BANKRUPTCY  STATEMENTS 

The  following  chapter  is  an  elaboration  of  the 
practical  work  connected  with  the  formulation  of  a 
statement  of  affairs  and  deficiency  statement,  the 
theory  of  which  is  covered  in  Volume  I,  Chapters 
XII  and  XIII  respectively. 

Statement  of  Affairs  and  Deficiency  Statement  (Chap- 
ter XXV) 

If,  as  suggested  in  the  study  of  Chapters  XII  and  XIII  in 
Volume  I,  the  student  has  left  the  detailed  study  of  these  two 
chapters  until  ready  for  more  advanced  work  in  connection  with 
statement  preparation,  the  time  has  now  arrived  when  the  matter 
may  be  taken  up.  The  theory  of  the  subject  is  simple.  To  im- 
press the  procedure  on  the  mind  is  difficult,  though  well  worth 
the  time  required.  Therefore,  from  the  data  given  in  the  state- 
ments in  this  chapter,  reconstruct  the  trial  balance  and  with 
this  as  a  guide  try  to  compile  a  statement  of  affairs  and  a  de- 
ficiency statement  in  the  form  illustrated  in  Volume  I  and  al«0 
in  the  form  shown  in  this  chapter. 

Problems  26  to  28  deal  specifically  with  the  accounting  re- 
quired in  drawing  up  a  statement  of  affairs  and  deficiency  state- 
ment. They  furnish  the  advanced  practice  work  required  for  a 
thorough  grasp  of  the  subject. 


114  READING  GUIDE 

Assignment  10 
COMBINATIONS   AND    CONSOLIDATIONS 

These  chapters  form  a  composite  group  covering 
the  subject  of  consohdations.  While  relatively  sim- 
ple in  theory,  the  practical  application  of  the  theory 
of  consolidations  often  taxes  the  analytical  power  and 
knowledge  of  the  accountant  to  the  utmost. 

Methods  of  Combinations  (Chapter  XXVI) 

Sections  1  to  6  contain  preliminary  information.  The 
theory  begins  in  §  7.  The  illustrative  examples  in  the  later  sec- 
tions should  be  carefully  studied. 

Holding  Company  Balance  Sheet  (Chapter  XXVII) 

From  the  illustrative  data  given  in  this  chapter,  work  out 
the  balance  sheets  showing  the  effect  of  different  methods  of 
treatment,  and  then  compare  your  work  with  the  text.  You  can- 
not remember  the  theory  of  the  subject  without  practice  work  of 
this  kind. 

Consolidated  Balance  Sheet  (Chapter  XXVIII) 

After  carefully  studying  this  chapter,  work  out  the  com- 
bined balance  sheet  of  the  two  subcompanies  and  the  consoli- 
dated balance  sheet  of  the  three  companies  from  the  data  given 
at  the  beginning  of  §  2.  Do  the  same  practice  work  in  connec- 
tion with  §§7  and  10,  after  studying  the  theory  to  be  applied. 
This  work  is  essential  as  a  preliminary  practice  to  the  solution 
of  the  consolidation  problems  given  in  Volume  V. 

Problems  79  to  88  cover  the  preparation  of  consolidation 
statements  and  at  the  same  time  furnish  many  examples  of  the 
kind  of  difficulties  which  are  likely  to  confront  the  accountant 
and  the  solution  of  which  will  test  his  powers  of  reasoning  and 
analysis  to  the  utmost. 


BUSINESS  ACCOUNTING— VOLUME  IV  H5 

Assignment  11 
DETECTION    OF    ERRORS 

The  three  chapters  in  this  assignment  suggest 
methods  of  testing  the  accuracy  and  completeness  of 
the  books  of  account  and  of  locating  errors  when 
known  to  exist. 

Classification  and  Detection  of  Errors  (Chapters  XXIX 

AND  XXX) 

The  information  in  these  two  chapters  is  based  squarely  on 
the  theory  of  accounts,  and  its  relation  to  the  practical  side  of 
the  accountant's  work  is  such  as  to  make  it  of  especial  interest. 
Chapter  XXIX  contains  mostly  preliminary  information  which 
should  be  thoroughly  understood.  Chapter  XXX  contains  sev- 
eral practical  expedients  which  should  be  worked  out  with  pencil 
and  paper  until  the  method  is  memorized. 

Location  of  Errors  (Chapter  XXXI) 

The  information  in  this  chapter  has  a  very  practical  bearing 
upon  the  taking  of  a  trial  balance  and  the  work  of  the  book- 
keeper in  general.  To  memorize  the  rules  and  suggestions  here 
given,  and  to  acquire  facility  in  their  use,  they  should  be  referred 
to  as  occasion  requires  when  practical  work  is  being  done  on  a 
set  of  books.  From  the  data  given  in  §  6,  work  out  the  solution 
to  the  problem  and  compare  with  the  result  shown  in  §  7. 


Assignment  12 
VERIFICATION    OF   ASSETS 

The  two  final  chapters  in  this  vohime  show  how 
the  executive  or  owner  of  the  business  can  assist  tlie 


116  READING  GUIDE 

accountant  in  maintaining  correct  accounts.  In  addi- 
tion, the  proper  method  of  rectifying  errors  on  the 
books  is  briefly  described  in  this  assignment. 

Verification  of  Assets  (Chapter  XXXII) 

This  chapter  covers  that  part  of  the  work  of  a  professional 
auditor  which  the  executive  or  owner  of  a  business  may  from 
time  to  time  do  for  himself,  merely  as  an  ordinary  business 
precaution  or  safeguard. 

Correction  of  Errors  (Chapter  XXXIII) 

The  theory  and  examples  in  this  chapter  cover  a  matter 
which  always  presents  difficulties  to  the  student  and  which 
seldom  is  properly  handled  in  actual  business  practice.  Book- 
keepers and  accountants,  however  methodical  in  their  work,  are 
liable,  like  other  workers,  to  make  mistakes.  How  to  handle 
the  problems  and  difficulties  which  arise  when  mistakes  are  made 
is  a  matter  with  which  every  accountant  should  be  familiar. 

For  practice  work  on  Chapters  XXIX  to  XXXIII,  take  up 
Problems  90  to  93  of  Volume  V. 


Volume  V 
Illustrative  Accounting  Problems 


SUGGESTIONS  FOR  THE  USE  OF 
VOLUME  V 

The  grouping  of  material  into  assignments  fol- 
lowed in  Volumes  I  to  IV,  obviously  cannot  be  ap- 
plied to  Volume  V,  which  is  made  up  entirely  of 
problems.  It  may  be  noted,  further,  that  the  prob- 
lems have  been  arranged,  so  far  as  possible,  to  follow 
the  order  of  the  subjects  in  the  preceding  volumes, 
though,  as  many  of  the  problems  cover  more  than  one 
phase  of  accounting  theory,  this  arrangement  is  not 
always  practicable.  The  selection  of  the  problems 
has  been  made  with  a  view  to  testing  the  student's 
mastery  of  theory,  at  the  same  time  furnishing  him 
with  examples  of  the  kind  of  difficult  accounting 
problems  that  might  be  met  with  in  actual  business 
practice,  and  the  kind  of  problems  he  would  be  re- 
quired to  solve  if  he  presented  himself  for  examina- 
tion before  a  board  of  C.  P.  A.  examiners  or  before 
the  examiners  of  the  American  Institute  of  Account- 
ants. 

In  studying  each  problem,  the  student  should 
read  its  terms  slowly  and  as  many  times  as  necessary 
until  he  thoroughly  understands  what  is  meant  and 
what  is  required.  Even  a  trained  accountant  could 
not  grasp  the  method  of  fulfilling  the  requirements 
of  many  of  these  problems  at  the  first  or  even  the  sec- 
ond reading,  so  the  beginner  need  not  hope  to  pene- 

119 


120  READING  GUIDE 

trate  their  meaning  at  the  first,  second,  or  even  third 
attempt.  When  the  data  on  which  the  problem  is 
based  are  understood  and  the  requirements  are 
grasped,  turn  to  the  points  illustrated  at  the  end  of 
the  problem,  after  which  look  up  the  passages  in  the 
text  of  Volumes  I  to  IV  which  discuss  the  theory  in- 
volved in  the  solution  of  the  problem  under  consid- 
eration. 

Having  reviewed  the  theory  and  practice  appli- 
cable to  a  given  case,  try  to  solve  the  problem  in  your 
own  way  without  reference  to  the  solution.  This  will 
require  hard  thinking,  in  some  cases  very  hard  think- 
ing, and  j^ou  will  be  tempted  to  shirk  the  necessary 
brain  cudgelling  by  turning  to  the  solution.  Do  not 
take  this  easy  road  out  of  your  perplexities.  Study 
the  theory  and  the  terms  of  the  problem  again  and 
again  until  light  begins  to  dawn  and  then  'make  a 
stab"  at  the  solution.  Some  of  the  problems  are  so 
complex  and  difiicult  that  you  are  bound  to  flounder, 
and  on  referring  to  the  solution  you  will  have  to  work 
back  to  the  terms  of  the  problem  to  understand  the 
method  whereby  the  problem  should  be  solved. 

Having  made  the  attempt  and  noted  your  mis- 
takes and  their  cause,  leave  the  problem  for  a  time 
and  return  to  it  again  when  you  have  wholly  or 
partly  forgotten  the  method  of  its  solution.  At  your 
second  attempt  follow  the  same  procedure  and  re- 
peat until  you  can  solve  each  problem  correctly  and 
readily.  By  such  practice  work  as  this  you  will 
gradually    develop    your    analytical    and    reasoning 


BUSINESS  ACCOUNTING— VOLUME  V  121 

powers  and  master  the  theory  and  practice  of  ac- 
counting. 

Often  the  chief  difficulty  of  a  problem  lies  in  one 
or  more  transactions  which  are  purposely  included 
because  of  their  complexity  or  unusual  character,  or 
because  the  terms  in  which  they  are  stated  are  am- 
biguous and  may  be  interpreted  in  different  ways. 
The  complex  transactions  become  simple  under  an 
adequate  amount  of  mental  perspiration.  The  data 
which  are  capable  of  different  interpretations  should 
be  handled  in  different  ways  showing  all  possible 
solutions.  After  a  thorough  grasp  of  a  problem  as  a 
whole  is  obtained  and  the  general  lines  of  its  solution 
have  been  mentally  formulated,  you  should  concen- 
trate on  the  transactions  which  are  specially  difficult 
until  you  reach  a  decision  as  to  how  they  ought  to  be 
handled.  To  help  you  in  this  work,  a  number  of  sug- 
gestions are  given  covering  the  problems  which  can 
be  solved  by  the  study  of  Volume  I  and  a  few  chap- 
ters in  Volume  IV  as  indicated  in  the  'Toints  Illus- 
trated" found  at  the  end  of  each  problem.  After 
acquiring  the  ''knack"  of  attacking  a  problem  in  the 
right  way,  the  student  is  left  to  his  own  resources 
when  solving  the  problems  bearing  on  Volumes  II 
to  IV, 

Problem:  1 

This  problem  is  hardly  worthy  of  the  name  because  its  solu- 
tion should  present  no  difficulty.  All  that  is  required  is  to  fol- 
low exactly  the  same  procedure  as  indicated  in  Volume  I,  Chap- 
ter XX,  §  12,  and  the  correct  answer  wUl  be  determined. 


122  READING  GUIDE 

Problem  2 

The  length  of  this  problem  makes  the  solution  seem  more 
difficult  than  it  actually  is.  Length  in  itself  is  not  necessarily  a 
cause  of  complexity,  as  every  problem  can  be  attacked  piece- 
meal and  be  effectually  overcome  if  its  difficulties  are  concen- 
trated on  one  by  one  in  methodical  fashion. 

The  "snag"  in  this  problem  is  obviously  contained  in  the 
paragraph  preceding  the  last  one  of  the  explanatory  matter, 
where  it  is  stated  that  fraud  is  suspected  on  the  part  of  the 
cashier.  To  determine  whether  or  not  there  has  been  any  fraud, 
what  is  the  first  requirement?  Find  out  how  much  has  actually 
been  deposited  in  the  bank  and  how  much  should  have  been 
deposited.  The  amount  which  should  have  been  deposited  is 
likely  to  be  a  larger  amount  than  that  actually  deposited,  so  we 
take  this  first.  This  amount  consists  of  collections  from  cus- 
tomers plus  any  cash  on  hand  not  yet  deposited.  We  must  not, 
however,  take  the  footing  of  cash  collections  as  correct.  If 
fraud  is  suspected,  the  footings  are  the  first  points  to  verify. 
Attacking  the  problem  in  this  way,  it  is  found  that  there  is  an 
actual  shortage  in  deposits  of  $114.88. 

The  next  point  to  determine  is  whether  the  disbursements 
entered  on  the  cash  book  equal  the  .checks  paid  by  the  bank  plus 
the  checks  outstanding.  If  you  will  figure  this  out  for  yourself, 
you  will  find  that  the  total  bank  disbursements  (including  out- 
standing checks)  are  $10.36  in  excess  of  the  disbursements 
entered  on  the  cash  book. 

Having  determined  these  two  shortages,  the  next  step  is  to 
figure  the  true  cash  book  balance.  This  is  readily  done  by  de- 
ducting the  corrected  disbursements  from  the  corrected  receipts. 
If,  now,  the  bank  balance  plus  cash  in  hand  is  deducted  from 
the  cash  book  balance,  the  resulting  figure  should  give  the  net 
amount  of  the  shortage  as  stated  above. 

The  method  of  presenting  the  above  data  as  well  as  the  bank 
reconciliation  statement  should  be  carefully  noted  when  studying 
the  solution,  after  which  you  should  go  over  the  problem  again 


BUSINESS  ACCOUNTING— VOLl^ME  V 


123 


and  again  until  you  can  reproduce  the  three  sUtements  in  cor- 
rect form. 

Problem  3 

Following  the  procedure  explained  in  Volume  I,  Chapter 
XX^  the  entries  required  to  record  the  petty  cash  disbursemenU 
are  made  in  the  same  way  as  any  other  cash  disbursement.  The 
crux  of  the  problem  lies  in  the  method  of  reducing  the  fund  by 
$200.  Here  it  is  necessary  to  reason  out  the  simplest  and  clearest 
way  of  recording  the  reduction. 

It  is  advisable  to  draw  the  check  for  the  total  disbursements 
and  then  deposit  $200,  because  this  simplifies  the  bookkeeping. 
If  a  check  for  $262.50  were  drawn,  a  journal  entry  would  be 
required  to  complete  the  charges  to  the  expense  accounts  in- 
volved. The  use  of  such  a  journal  entry  would  be  somewhat 
confusing.  It  would  be  possible  to  journalize  the  total  payments, 
charging  the  expense  accounts  and  crediting  Petty  Cash  account, 
and  then  to  draw  a  check  for  $262.50,  charging  it  to  the  Petty 
Cash  account;  this  would  reduce  that  account  by  $200.  Such 
procedure  is  not  advisable  because  it  differs  from  the  usual  prac- 
tice of  making  no  entries  in  the  Petty  Cash  account  for  disburse- 
ments. It  would  also  require  an  explanation  in  the  cash  book 
covering  the  $262.50  check,  which  might  not  be  readily  under- 
standable. The  simplest  way  of  handling  the  transaction  is  to 
draw  a  check  in  the  usual  way  to  reimburse  the  fund  for  the 
payments  made,  and  then  to  deposit  to  the  credit  of  the  fund  the 
$200  by  which  the  fund  is  reduced. 

Problem  4 

The  point  with  this  problem,  as  with  the  last,  is  whether  or 
not  to  use  a  journal  entry  for  the  purpose  of  closing  the  indi- 
vidual creditors'  accounts  and  entering  them  on  the  voucher 
register. 

A  journal  entry  could  be  used  to  open  the  voucher  system, 
whereby  the  old  accounts  would  be  debited  and  the  total  credited 


124  READING  GUIDE 

to  Vouchers  Payable.  This  would  not  be  as  convenient  as  the 
method  suggested  in  the  solution^  because  it  would  require  the 
use  of  another  book,  namely,  the  journal,  and  because  it  would 
involve  posting  to  the  Vouchers  Payable  account  from  the  jour- 
nal as  well  as  from  the  voucher  register.  If  by  any  chance  all 
of  these  vouchers  were  not  paid  before  the  end  of  the  first 
month  in  which  the  voucher  system  was  installed,  the  balance  of 
the  Vouchers  Payable  account  would  not  agree  with  the  open  or 
unpaid  items  listed  in  the  voucher  register. 

Problem  5 

A  journal  .entry  is  required  in  this  case  because  a  new 
account  (Accounts  Receivable)  is  to  be  opened  in  the  general 
ledger  and  the  customers'  accounts  are  to  be  closed.  After 
posting  the  journal  entry  to  the  general  ledger,  the  accounts  with 
customers  would  be  opened  in  the  new  ledger  and  the  balances 
would  be  entered  on  the  debit  side  of  the  respective  accounts. 
The  postings  to  the  debit  accounts  in  the  customers  or  sales 
ledger  can  conveniently  be  made  from  the  journal  entry;  each 
customer's  balance,  therefore,  as  shown  in  the  journal  entry 
would  be  posted  twice,  once  as  a  credit  in  the  general  ledger 
and  once  as  a  debit  in  the  sales  or  customers  subsidiary  ledger. 
Both  folios  should  be  noted  in  the  journal  opposite  each  item. 

If  it  were  desired  to  open  an  adjustment  account  in  the  sales 
ledger,  as  explained  in  Volume  I,  Chapter  XXIV,  the  total, 
$716.14,  should  be  credited  to  it  from  the  above  journal  entry. 
It  is  suggested  that  the  reader  review  the  arguments  in  favor  of 
and  against  adjustment  accounts  as  given  in  Chapter  XXIV. 

Note  the  use  of  the  terms  "customers''  and  "sales"  ledger. 
Another  name  given  this  ledger  is  "accounts  receivable"  ledger. 
All  three  terms  are  commonly  employed. 

Problem  6 

As  it  is  stated  in  the  problem  that  neither  of  the  items  has 
been  entered  on  the  books,  the  first  step  is  to  make  the  necessary 


BUSINESS  ACCOUNTING— VOLUME  V  ,35 

journal  entries.  The  difficulty  of  making  these  entries  lies  in 
the  adjustment  to  be  made  by  a  remittance  of  stamjis.  ThU 
adjustment  is  obviously  required  to  maintain  the  equilibrium  of 
the  journal  entries. 

Where  one  person  or  business  is  both  a  debtor  and  a  creditor, 
as  in  this  solution,  it  is  generally  better  to  have  two  accounts 
for  him,  one  in  the  customers  ledger  and  one  in  the  creditors 
ledger.  A  notation  on  each  account  referring  to  the  other  should 
prevent  any  failure  to  offset  one  balance  against  the  other. 
Furthermore,  if  the  debit  and  credit  transactions  are  combined 
into  one  account,  the  result  will  be  a  deduction  of  asset  from 
liability,  or  vice  versa,  which  in  general  is  contrary  to  account- 
ing principles. 

Problem  7 

At  the  first  and  even  second  reading  this  problem  may  seem 
puzzling,  but  if  split  up  into  its  component  transactions  most  of 
its  difficulties  vanish.  Each  paragraph  requires  its  own  jour- 
nal entry.  The  first  entry  is  a  sale;  therefore  credit  Sales 
account  and  debit  the  customer's  account.  The  second  trans- 
action is  a  note  and  cash  transaction — cash  and  a  note  arc 
received  in  settlement  of  the  customer's  indebtedness.  The 
third  transaction  involves  a  receipt  of  cash,  and  expense  of  bank 
discount,  and  an  offsetting  credit  to  Notes  Receivable  Discounted. 
By  analyzing  the  problem  in  this  way,  its  solution  reduces  itself 
to  the  recording  of  every-day  kind  of  cash  and  note  transactions. 

Problem  8 

Before  taking  up  this  problem,  it  is  necessary  to  turn  to 
Volume  IV,  Chapter  VII,  and  study  the  methods  of  adjusUng 
Surplus  account.  Most  of  the  capital  adjustments  made  on  the 
books  of  a  corporation  and  applicable  to  prior  periods  affect 
this  account.  A  knowledge  of  its  operations  is  required  to  solve 
other  problems,  which,  apart  from  this  matter,  illustrate  the 
principles  set  forth  in  Volume  I. 


126  READING  GUIDE 

If  the  theory  of  surplus  adjustments  is  mastered^  the  solu- 
tion of  the  problem  reduces  itself  to  the  balancing  of  the  journal 
entries^  with  a  debit  or  credit  to  Surplus  as  the  case  requires. 

Problem  9 

This  problem  will  probably  perplex  you  for  a  while,  but  its 
difficulties  dissolve  under  the  operation  of  taking  the  required 
entries  one  by  one.  The  first  entry  must  record  the  last  annual 
reserve  for  depreciation.  The  second  entry  must  show  the  sale 
of  the  old  machine.  The  loss  resulting  from  the  sale  of  the 
machine  must  be  a  charge  to  the  reserve  created  to  cover  such 
losses.  As,  however,  the  reserve  is  in  excess  of  the  actual  loss 
due  to  replacement,  the  amount  of  the  excess  should  be  restored 
to  Surplus  from  which  it  was  originally  taken.  The  final  entry 
is  to  set  up  on  the  books  the  asset  value  of  the  new  machinery. 

Problem   10 

The  first  paragraph  in  the  explanation  of  this  problem  has 
no  bearing  on  the  solution,  as  the  requirements  of  the  problem  do 
not  ask  for  the  setting  up  of  either  the  Depreciation  on  Delivery 
Equipment  or  the  Delivery  Equipment  account.  All  that  is 
required  are  the  journal  entries  making  the  proper  adjustment. 

The  first  transaction  is  clearly  a  loss,  and  the  difference 
between  the  reserve  and  the  cost  of  the  deceased  animal  is  a 
charge  to  Surplus. 

The  second  transaction  is  more  preplexing.  As  the  differ- 
ence between  the  cost  of  the  horse  and  the  price  at  which  it  was 
sold  ($100)  has  been  charged  to  the  Reserve  account,  while  the 
depreciation  provided  for  the  horse  has  been  only  10%  for 
three  years  on  its  purchase  price,  it  is  evident  that  more  has 
been  charged  to  the  Reserve  account  than  has  actually  been 
credited  or  accumulated  therein.  This  error  calls  for  a  charge 
to  Surplus  and  a  credit  to  the  Reserve  account  in  order  to  bring 
the  reserve  to  its  proper  figure. 


BUSINESS  ACCOUNTING-VOLUME  V  jg? 

Problem   11 

The  entries  required  to  record  the  facts  given  in  the  fir«t 
two  paragraphs  are  routine  entries  which  you  should  be  able  to 
prepare  without  any  difficulty.  The  third  paragraph  requircji  an 
answer  to  the  following  question:  What  is  the  amount  of  the 
loss  on  this  account  to  be  charged  to  the  Reserve  account  and 
written  off  the  customer's  account? 

The  final  entry,  as  your  study  of  the  preceding  problems 
will  make  clear  to  you,  represents  a  profit,  in  that  the  loss 
already  charged  to  Surplus  must  be  canceled. 

Problems  12 

This  problem  is  one  of  only  moderate  difficulty.  The  first 
error  to  be  rectified  is  the  inclusion  in  the  inventory  of  the  two 
lathes  charged  to  the  Essex  Machine  Company.  This  amount 
must  obviously  be  deducted  from  the  inventory  account;  to  what 
account  should  it  be  charged?  The  clerical  errors  can  be 
corrected  by  reducing  the  asset  value  of  the  inventory  by  the 
net  overcharge. 

Regarding  the  L.  P.  Fuller  transaction,  note  that  the  assumed 
loss  was  charged  to  Profit  and  Loss,  not  to  the  Reserve. 

Problem   13 

This  problem  can  readily  be  solved  if  it  is  attacked  piece- 
meal. The  first  requirement  should  present  no  difficulty  if  care 
is  taken  to  set  up  the  returns,  allowances,  discounts,  etc.,  on  the 
correct  side  of  the  account.  The  journal  entry  to  close  out  the 
Merchandise  account  and  to  set  up  separate  accounts  instead 
requires  the  journalization  of  both  sides  of  the  old  account 

The  profit  on  sales  is  the  gross  profit — a  simple  matter  to 
determine  if  the  explanation  in  the  text  is  followed. 

In  closing  the  accounts  into  a  Trading  account,  remember 
that  Sales  and  Purchases  accounts  must  show  their  net  figures, 
and  so  the  accounts  opened  to  record  the  returns  and  allow- 


128  READING  GUIDE 

ances  must  first  be  closed  into  Sales  and  Purchases  accounts 
before  these  accounts  can  be  closed  into  Trading  account.  Care- 
ful study  of  the  points  illustrated  by  the  problem  should  enable 
you  to  solve  it  correctly  without  reference  to  the  solution  given. 

Peoblem  14 

Note  carefully  the  requirements  here.  They  do  not  ask  for 
journal  entries  or  the  setting  up  of  an  account.  Therefore^  the 
solution  may  be  presented  in  the  form  of  a  brief  explanation. 

The  interest  charged  to  B  and  C  is  clearly  a  profit  to  be 
divided  among  the  three  partners  in  the  way  designated.  One 
solution  is  worked  on  the  basis  on  which  the  partners  ought  to 
have  contributed.  An  alternative  method  is  to  base  the  solution 
on  the  actual  total  capital  contributed,  viz.,  $185,000,  instead  of 
$200,000.     Try  to  solve  the  problem  both  ways. 

Problem  15 

The  difficulties  of  this  problem  are  simplified  by  careful 
consideration  of  its  terms  and  requirements.  The  net  profit  to 
be  divided  refers  to  the  division  of  the  net  income  resulting  from 
interest  on  the  partners*  drawings  in  excess  of  salaries,  reduced 
by  the  interest  on  capital.  To  give  effect  to  the  interest  on  capi- 
tal clause  requires  one  entry,  i.e.,  the  setting  up  of  an  Interest 
on  Capital  account,  at  the  same  time  crediting  each  partner's 
capital  account  with  his  interest.  The  Interest  on  Capital 
account  must  then  be  credited  with  the  interest  on  the  partner's 
drawings,  with  which  each  partner's  current  or  drawing  account 
is  charged.  The  balance  of  the  Interest  account  then  represents 
the  remaining  income  to  be  divided  between  the  partners  as 
stated  in  the  problem.  The  distribution  of  this  should  be  shown 
in  a  way  to  make  clear  the  net  increase  or  decrease  in  each 
partner's  capital  account  as  the  case  may  be.  It  should  be 
observed  that  partners'  capital  accounts  are  not  required  in  the 
solution. 


BUSINESS  ACCOUNTING— VOLUME  V  i^ 

Problem  16 

This  problem  is  constructed  on  the  same  lines  as  the  preced- 
ing one,  and  if  its  terms  are  carefully  read  you  should  be  able  to 
solve  it.  Pay  particular  attention  to  the  method  you  use  for 
determining  the  interest  on  each  partner's  drawings. 

The  problem  is  ambiguous  in  that  there  is  no  certainty  con- 
cerning the  amount  which  B  withdrew.  In  the  solution  it  is 
assumed  that  he  drew  $2,500  each  quarter.  However,  it  would 
seem  fairly  reasonable  to  assume  that  his  total  drawings  for  the 
year  were  $2,500.  Ambiguities  of  this  sort  are  regrettable  in 
C.  P.  A.  problems,  and  yet  they  are  so  often  found  in  actual 
practice  that  their  appearance  in  such  problems  may  provide  a 
farther  test  of  the  candidate's  qualifications  for  practice. 

Problem   17 

The  working  of  this  problem  on  partnership  dissolution 
presents  little  difficulty,  though  the  form  in  which  the  require- 
ments are  to  be  fulfilled  may  not  seem  clear  at  the  first  reading. 
The  first  step  should  be  the  preparation  of  a  balance  sheet  to 
disclose  the  loss  and  at  the  same  time  to  furnish  the  balances  of 
all  the  accounts  required  for  the  solution.  The  solution  may 
be  presented  in  the  form  of  a  running  comment  which  explains 
the  division  of  the  remaining  cash  balance  after  the  trade  cred- 
itors' claims  have  been  settled. 

Problem   18 

The  solution  of  this  problem  follows  the  same  general  lines 
as  the  solution  of  Problem  17.  Having  drawn  up  the  balance 
sheet,  a  comparison  of  the  assets  available  for  distribution  with 
the  balances  in  the  capital  accounts  discloses  the  loss  (to  be 
borne  by  each  partner  in  his  profit -and  loss  sharing  ratio). 

Problems  19  to  21 

These  three  problems  furnish  further  practice  work  in  part- 
nership accounting.     As  the  comments  which  accompany  their 


130  READING  GUIDE 

solution  are  explanatory  of  the  difficulties  involved,  no  further 
comment  is  here  required. 

Problem  22 

The  number  of  transactions  involved  and  the  lengthy  require- 
ments make  this  problem  seem  difficult,  but  it  can  be  worked 
out  step  by  step  on  straightforward  lines.  The  text  covering 
the  various  points  illustrated  should  be  reviewed  as  work  pro- 
gresses, both  to  insure  correct  procedure  and  to  refresh  the 
memory  on  any  doubtful  points. 

In  solving  the  problem,  take  up  first  the  prepaid  and  accrued 
items,  giving  full  explanation  for  each  journal  entry.  In  your 
solution  prepare  a  working  sheet  based  on  the  procedure  de- 
scribed in  Volume  I,  Chapter  VIII,  and  compare  it  with  the 
working  sheet  shown  in  the  solution. 

Problem  23 

In  the  organization  of  a  corporation  to  acquire  a  business 
formerly  conducted  by  a  partnership  or  a  sole  proprietor,  the 
cash  of  the  old  business  as  a  rule  is  not  taken  over  by  the  new 
corporation. 

The  solution  is  based  on  the  assumption  that  the  partnership 
books  are  to  be  discarded  and  a  new  set  of  books  opened  for  the 
corporation.  When  the  partners  in  a  business  become  the  prin- 
cipal stockholders  in  a  new  corporation  formed  to  take  it  over, 
it  is  advisable,  though  not  necessary,  to  open  a  new  set  of  books. 
Entries  could  be  made  bringing  onto  the  books  only  the  new 
accounts  and  closing  out  the  capital  accounts  of  the  partners. 

In  this  problem,  if  the  accounts  were  to  be  continued  in  the 
books  of  the  former  partnership,  the  only  entry  necessary  would 
be  as  follows: 

Good- Will     $25,000.00 

Smith,   Capital    $  10,000.00 

Jones,   Capital    10,000.00 

Clark,   Capital    5,000.00 

(Explanation.) 


BUSINESS  ACCOUNTING-VOLUME  V  13, 

Smith,   Capital    70,000.00 

Jones,   Capital    70,000.00 

Clark,    Capital    35,000.00 

Capital  Stock    175/)00.00 

(Explanation.) 

Problem  24 

When  subscriptions  to  capital  stock  are  taken,  to  be  paid  for 
later,  the  stock  certificates  are  usually  not  is.sued  until  the  sub- 
scriptions have  been  paid.  In  that  event  no  credit  can  rightly 
be  made  to  the  Capital  Stock  account  until  payment  for  the  stock 
has  been  received.  This  necessitates  the  opening  of  two  tem- 
porary accounts  to  record  the  subscriptions  receivable  and  the 
amount  of  the  subscribed  capital  stock — as  illustrated  by  this 
problem. 

Problem  25 

By  *'book  value"  in  this  problem  is  meant  the  net  worth  of 
each  share  of  common  stock.  The  problem  illustrates  the  fuunda- 
mental  accounting  principle  that  the  net  worth  or  capital  of  a 
business  is  the  excess  of  its  assets  over  its  liabilities.  It  also 
illustrates  the  fact  that  this  essential  nature  of  capital  is  as  true 
of  the  corporation  as  of  any  other  form  of  business  organization. 

Problems  26  to  30 

The  chief  requirement  for  the  solving  of  this  and  the  next 
four  problems  is  a  thorough  grasp  of  the  procedure  in  drawing 
up  a  statement  of  affairs,  a  deficiency  account,  and  a  statement 
of  realization  and  liquidation.  A  thorough  knowledge  of  this 
technique  and  procedure  can  be  acquired  only  by  working  over 
a  number  of  problems  until  the  correct  methods  come  readily 
to  mind. 

In  this  kind  of  problem  it  is  particularly  important  that  the 
terms  of  the  problem  should  be  carefully  read  and  understood 
by  the  student. 


132  READING  GUIDE 

Problems  31  to  34 

These  problems  on  single-entry  methods  furnish  valuable 
practice  work  in  fundamental  principles  and  should  be  given 
very  careful  study.  As  the  comments  in  the  *Toints  Illus- 
trated*' sufficiently  cover  each  solution,  no  further  explanation 
is  required. 

The  problems  discussed  up  to  this  point  are  based  on  the 
theory  of  accounts  covered  in  Volume  I  and,  as  you  will  have 
discovered,  they  cannot  be  solved  without  a  thorough  knowledge 
of  the  principles  and  procedure  explained  therein.  You  should 
continue  to  work  over  them  until  you  are  able  to  draw  up  the 
correct  solutions  in  the  forms  given  in  Volume  V  without  re- 
ferring to  these  for  help  or  even  suggestions.  This  practice 
work  is  essential  as  a  means  of  clearing  up  any  doubts  about 
the  correct  method  of  procedure,  and  is  a  means  of  fixing  in  the 
mind  imperfectly  memorized  points  of  theory.  Not  until  you 
have  made  your  ground  firm  behind  you  are  you  ready  to  pass 
on  to  the  remaining  problems,  the  solutions  of  which  require  a 
knowledge  of  the  contents  of  Volumes  I  to  IV. 

In  your  attack  upon  the  remaining  problems  you  are  left  to 
your  own  resources.  You  will  find  that  problems  of  unusual 
difficulty  which  contain  complicated  or  ambiguous  transactions 
have  attached  to  them  a  sufficient  amount  of  explanatory  com- 
ment to  indicate  the  correct  method  of  solution — assuming,  of 
course,  a  thorough  knowledge  of  the  theory  and  procedure  in- 
volved. You  should  by  now  have  acquired  the  knack  of  attack- 
ing their  difficulties  in  the  right  way — that  is,  one  by  one  with 
intense  concentration,  waiting  for  light  to  break  in  on  the  mind 
both  as  to  the  nature  of  the  transaction  and  the  method  of  re- 
cording it, 


General  Index  to 
Business  Accounting  Set 


USE  OF  THE  GENERAL  INDEX 

In  addition  to  its  primary  purpose  of  providing 
a  complete  course  of  study  for  the  man  whose  ambi- 
tion it  is  to  become  an  accountant,  a  further  practical 
use  to  which  ''Business  Accounting"  may  be  put  is 
that  of  a  work  of  reference.  The  five  volumes  con- 
stitute a  storehouse  or  encyclopaedia  of  accounting 
information  from  which  the  business  man,  the  book- 
keeper, and  the  accountant  can  pick  and  choose  the 
particular  information  they  are  in  search  of  to  solve 
an  accounting  difficulty  or  problem. 

The  use  of  the  volumes  in  this  way  will  be  facili- 
tated by  searching  for  the  desired  information,  not  in 
one  or  more  of  the  separate  indexes  found  at  the  end 
of  each  volume,  but  in  the  general  or  main  index 
which  follows  at  the  end  of  this  guide.  The  separate 
indexes  serve  the  purpose  of  quick  and  ready  refer- 
ence to  a  matter  which  the  reader  knows  to  be  dis- 
cussed in  a  particular  volume.  The  general  index  is 
for  the  use  of  the  reader  who  wishes  to  review  all  the 
information  on  a  given  subject  or  for  the  business 
man  who  desires  to  look  up  accepted  practice  on  a 
particular  point. 

The  man  who  is  not  a  professional  accountant, 
however  extended  and  thorough  his  knowledge,  of 
the  accounting  field,  has  continual  need  of  such  a  gen- 
eral view  of  the  subject  as  these  volumes  present,  to 
confirm  his  recollection  of  an  item  or  to  deteruune  a 

185 


136  READING  GUIDE 

puzzling  application.  Such  a  reader  will  naturally 
turn  first  to  the  general  index  in  this  volume  to  trace 
connections  and  cross-references. 

Without  this  reference  aid,  the  reader  who  is 
studying  business  accounting  as  a  whole,  or  is  in 
search  of  the  best  method  of  solving  an  accounting 
problem,  would  be  compelled  to  consult  the  indexes 
of  several  of  its  volumes  if  he  wished  to  exhaust  the 
information  contained  in  its  pages  on  a  given  subject. 
With  a  general  index,  however,  he  can  compare  the 
information  in  one  volume  with  that  in  another;  he 
can  look  up  rapidly  and  with  precision  the  informa- 
tion he  is  in  search  of;  he  can  find  in  one  place  and 
in  one  index  reference  by  volume  and  page  to  the  par- 
ticular subject  he  wishes  to  study  or  refer  to. 

Few  men  carry  in  their  recollection  the  full  detail 
of  matters  with  which  they  are  not  working  daily. 
Yet  not  many  business  men  have  acquired  the  habit  of 
immediate  recourse  to  the  index  of  a  book  which  will 
give  them  the  accounting  or  any  other  kind  of  infor- 
mation they  may  need.  In  this  respect  the  mental 
attitude  of  the  business  man  is  unlike  that  of  the  pro- 
fessional man.  The  professional  man  is  compelled 
to  master  the  existing  body  of  knowledge  relating  to 
his  profession,  and  in  consequence  he  is  trained  to 
have  prompt  recourse  to  books  when  in  need  of  in- 
formation. The  business  man  has  learned  primarily 
in  the  school  of  experience.  As  the  knowledge  to  be 
acquired  from  books,  though  exceedingly  helpful,  is 
not  among  the  first  requisites  for  success  in  a  busi- 


GENERAL  INDEX  |g- 

ness  career,  the  business  man  does  not  always  know 
to  what  extent  books  can  help  him.  Moreover,  even 
when  he  feels  the  need  of  consulting  books,  he  often 
does  not  know  the  quickest  way  to  obtain  the  informa- 
tion he  desires. 

The  purpose  of  an  index  is,  of  course,  to  enable 
the  reader  of  a  particular  book  to  find  the  page  or 
pages  on  which  appears  the  information  he  is  in  search 
of  and  which  he  knows  to  be  or  which  may  be  assumed 
to  be  in  the  book.  The  method  of  finding  this  in- 
formation is  too  well  known  to  require  any  explana- 
tion. Attention,  however,  may  be  drawn  to  the  utility 
of  cross-references  as  means  of  directing  the  search 
if  the  reader  wants  to  exhaust  a  given  subject.  In 
cases  where  certain  specific  information  forms  a  part 
of  a  whole  subject  and  it  is  desired  to  study  the  re- 
lationship of  the  part  to  the  whole,  a  cross-reference 
will  usually  be  found  indicating  the  direction  in  whicli 
the  search  is  to  be  made.  For  instance,  in  looking  up 
a  point  relating  to  the  transactions  of  a  holding  com- 
pany, on  referring  to  ''Holding  Company"  the  cross- 
reference  is  found  ''See  also  'Combinations  and  Con- 
solidations'" ;  under  "Coinsurance  Clause"  appears 
the  cross-reference  "See  also  'Fire  Insurance,  Ad- 
justment'"; under  "Administrative  Expense*'  ap- 
pears the  cross-reference  "See  also  Xabor,  Indirect,' 
'Non-productive  Departments'  " ;  and  so  on.  In  each 
of  the  above  examples  the  reference  is  from  the  part  to 
the  whole,  so  that  if  the  study  of  the  part  fails  to  fur- 
nish the  explanation  sought  for,  the  reader's  attention 


138  GENERAL  INDEX 

is  directed  to  a  larger  and  more  comprehensive  field 
of  information. 

In  the  same  way,  one  subject  which  is  closely 
allied  to  another  subject  may  often  be  profitably  re- 
ferred to  as  a  means  of  throwing  further  light  on  a 
difficult  point  or  matter.  For  example,  in  the  study 
of  reserves  an  allied  subject  is  that  of  sinking  funds 
and  so  a  cross-reference  is  found  under  both  heads 
connecting  one  subject  with  another. 

In  the  use  of  the  general  index  two  points  in  par- 
ticular need  to  be  stated: 

1.  All  references  to  problems  are  page  numbers 

and  are  treated  in  the  same  manner  as 
references  to  forms,  i.e.,  they  are  indented 
beyond  the  margin  of  other  headings  and 
in  this  way  are  distinguished  from  ordi- 
nary text  matter. 

2.  Cost  accounting  items  have  not  in  all  cases 

been  distinguished  as  such  in  the  general 
index,  but  are  to  be  inferred  in  all  in- 
stances of  reference  to  Volume  III,  which 
is  entirely  on  the  subject  of  cost  ac- 
counting. 


GENERAL  INDEX 


(All  references  are  to  pages.    Roman  numerals  indicate  volumtt) 


Abstract  of  Stores  Ledger,  II,  143^  144 
Acceptances,  Trade,  I,  304,  305 
Accident  Insurance,  III,  238 
Accommodation  Indorsement,  IV,  248 
Account,  (See  also  "Accounts,"  "Accounting," 
"Controlling  accounts,"  "Ledger") 
Forms,  I,  43 
Books  of  (See  "Books  of  account") 
Capital,  I,  67 
Cost  of  sales.  III,  357 

Illustrated,  III,  320,  360 
Debits  and  credits  defined,  I,  17,  -ft,  176 
Deficiency,  I,  140,  141;  IV,  319,  326 
Illustrative  statements,  I,  140;  IV,  32Q 
Problem,  V,  61 
Defined,  I,  17 
Field  of  service,  II,  265-267 

Example,  II,  265,  266 
Form  of,  I,  42-44 

Forms,  I,  43 
Mixed,  I,  79-83 
Adjustingf  I,  80-83 
Example  and  treatment  of,  I,  80-83 
Nominal,  I,  59,  60 
Personal,  I,  58,  59 
riant  and  sundry  assets,  I,  371 

Problems,  V,  170,  202,  277,  281 
Profit  and  loss   (See   "Profit  and  loss  ac- 
count") 
Real,  I,  58,  59 
Surplus  (See  "Surplus") 
Work  in  process.  III,  79,  83 
Entries,  III,  83 
Illustrated,  III,  85,  90 
Journal  entry  illustrated,  III,  107 
Process  method.  III.  90. 
Production-center  system,  illustrated,  III, 

324 
Textile  costs,  III,  369-376,  380-389 
Accountancy, 

Defined,  I,  5,  16,  17;  II,  3 
Functions  of,  classified,  I,  5 


Accountant, 

Defined.  I.  10 

Duties  of,  I,  6,  7,  16 

Functions  of,  I,  7-10,  18 
Auditing,  I,  0,  10 
Clear  reports  and  statemrata.  I.  f 
Planning  and  adapUnff  lystema,  I,  7 
Recording  financial  history  qI 

1.8 
Special  investigaliona,  I,  0,  10 

Professional,  I,  IS 

Public,.ccrlified,  I,  IS,  14 

Training  of,  I.  12 

Accounting. (See  also  "Account,- 
"Bookkeeping") 
Advanced.  I.  8,  9;  IV,  5-11 
Auditing,  I.  9,  10 

Distinguished  from  elemenUry.  IV.  S 
Scope  of,  IV.  S-n 
Analytical.  II.  6 
Branches  and   chain  alorts   (8m  **BrBack 

stores") 
Branches  of.  II,  5-8 
Cash  discount.  I.  375-00 
Club  (See  "Cluba") 
Constructive, 
Defined.  I.  7 
Function  of,  II,  7 
Corporation  (Sec  "CocporaUoa**) 
Cost  (See  "Coat  ac<x>untinf ") 
Dealing  with— 
Persons.  II,  iS 
Progression   or   retrogrcaMon. 

11.25 
Property.  II,  tS 
Defined.  II,  8 
Department, 
Expense  diatribution.  II.  468 
Functions  of.  II.  \i 
Estate  (See  "Estate  accountiac") 
Inspective,  II.  0 

Methods,  modernisatioa  ol.  I.  5-5 
Operative,  II.  6 
Partnership  (Sec  "Parlncrabip'*) 


189 


140 


GENERAL  INDEX 


Accounting — Conlinued 

Place  of,  in  organization,  II,  4 

Plant  (See  "Plant") 

Presentation   of    figures   in   statements, ^I, 

8,  153 
Professional  (See  "Professional  accounts") 
Records.  (See  "Records") 

Stores,  III,  122-141  (See  also  "Stores") 
System, 

Elaborate,  not  desirable,  II,  53 

Establishing,  II,  266 

Mechanical,  II,  173-175 

Necessity  for  proper,  II,  5 

Officials  and  employees,  co-operation  of, 
II,  '44 

Organization  plan,  II,  43 

Planning  and  installing,  I,  7;  II,  32-51 
(See  also  "Business,  survey  of,"  "Busi- 
ness, planning  accounting  system  for") 

SuperHsion,   Mathews,    George,    quoted, 
11,50 
Terms  used  in,  I,  16-26 

Account,  I,  17 

Accountancy,  I,  16,  17 

Accountant,  I,  16 

Assets,  I,  20 

Bookkeeper,  I,  16 

Books  of  account,  I,  10,  23 

Capital,  I,  22 

Corporation,  I,  19 

Credit,  I,  17 

Debit,  I,  17 

Liabilities,  I,  21 

Partnership,  I,  18 

Proprietorship,  sole,  I,  18 

Statement,  I,  25      * 
Theory  and  practice,  II,  S 

Accounts,  (See  also  "Account,"  "Accounting," 

"Ledger") 
Adjusting  (See  "Adjustments") 
Agency,  II,  373,  374 
Analysis  of,  I,  399-425 

Credit  accounts,  I,  415-425 

Debit  accounts,  I,  399-414 
Asset,  I,  65 

Depreciation,  I,  317-321 
Attorneys'  (See  "Professional  accounts") 
Auditing,  II,  6 
Balancing,  I,  44 
Charts,  II,  45;  III,  20 

Form,  III,  19,  20 


Accounts — Continued 

Classification,    I,    57-69,    259,    399-425; 
II,  264-286 
Problems,  V,  100,  215,  362 
Aid  to  correct  bookkeeping,  I,  62-64 
Aid  to  preparation  of  statements,  I,  64,  65 
Branches  and  chain  stores,  II,  379,  380 
Chronological  record,  II,  269 
Correct,  importance  of,  I,  57 
Credit  accounts,  I,  415-425 
Debit  accounts,  I,  399-414 
Grouping  to  facilitate  statement  prepara- 
tion, II,  284-286 
Groups,  variations  in  size  of,  II,  ^69 
Ledger  arrangement,  II,  270 
Manufacturing  or  trading  company,  II, 

272-284 
Methods  of,  II,  267-269 
Name  and  purpose  of  account  both  con- 
sidered, II,  269,  270 
Numeric  system,  II,  268,  271,  277-283 
Personal  accounts,  II,  267 
Process  cost  system.  III,  131,  328 
Retail  business,  II,  268 
Subdivisions,  I,  60-62 
Closing  (See  "Entries,  closing") 
Controlling  (See  "Controlling  accounts") 
Credit,  analysis  of,  I,  415-425 
Creditors',  mail-order  business,  II,  392 
Debit,  analysis  of,  I,  399-414 
Departmentalization  of.  III,  5,  7,  22 
Details  to  be  recorded,  II,  266 

Working  balance  sheets,  II,  266 
Estimated  cost  system.  III,  354-361 
Expense,  indirect,  I,  68,  69,  236;  III,  95-105, 
212,    217,    221,    223,    234-242,    268,    310 
(See  also  "Expense") 
Fixed  charges.  III,  234-242  (See  also  "Fixed 

charges") 
Income,  I,  67 
Inventory,  III,  79 
Journal  entries  (See  "Journal") 
Liability,  I,  66 

Numbering,  II,  268,  271,  277-283 
Decimal  system,  II,  271,  280-283 
Universal  system,  II,  271,  277-279 
Offsetting  entries,  I,  64 
Opening  entries,  I,  180,  263,  339-343,  367, 
370;  II,   233,  234   (See  also  "Entries, 
opening") 
Forms,  I,  181,  339,  340,  367,  368 


GENERAL  INDEX 


141 


Accounts — Continued 
Payable.  I,  113,  267 

Analysis  of,  I,  415,  416 
Personal,  II,  268 

Posting  (See  "Ledger,  posting  to") 
Process  cost  system.  III,  86-97,  269,  271, 
328,  343-347 
Classification,  III,  328 
Closing  accounts,  III,  106-108 
Illustrated,  III,  343-347 
Forms,  III,  344,  346 
Production-center  system.  III,  310-327 
Chart,  III,  310 

Form,  III,  312,  313 
Illustrated  accounts,  III,  319-326 
Receivable,  I,  109,  266 

Problems,  V,  19,  21,  70,  231 
Analysis  of,  I,  402 
Assignment  of,  IV,  221 
Assignment  of,  special  register,  IV,  222 
Losses  on,  as  closing  problem,  IV,  13 
Schedule  of,  I,  157,  158 
Uncollectible,  I,  326,  327 

Problem,  V,  19 
Valuation  of.  IV,  218 

Problem,  V,  70 
Verification,  IV,  426 
Suspense,  IV,  22,  27 

Problem,  V,  137 
Textile  costs.  III,  366-401  (See  also  under 

"Textile  costs") 
Use  of,  illustrated,  I,  41,  42 
Verification  of,  IV,  418 
"Accrual  Basis"  as  Compared  with  "Cash 

Basis,"  IV,  19,  20 
Accruals,    (See     also     "Deferred     credits," 
"Deferred  debits") 
Accrued  interest  distinguished  from  interest 
accrued,  IV,  13 
Accumulation    Envelope,     Hotel    Guest 
Charges,  II,  439,  440 
Form,  II,  440 
Adding  Machine^  II,  350 
Additions,      Expenditures     on,      Capital 

Charges,  IV,  47 
Adjustments,  (See  also  "Entries,  adjusting") 
Problems,  V,  125,  132,  180,  271,  343 
Advanced  accounting,  scope  of,  IV,  3-1 1 
Between  actual  and  applied  expense.  III, 
212,  282-285,  295 
Flat  percentage  charge.  III.  284 


AojCHTMBNTs— ConhntM^ 

Between    actual    and    applied    mmM 

Continued 

Production-center  lyitem.  III.  tM 

Reserve  account.  III.  MS 
Between  actual  and  eatimatcd  raata.  III.  SS) 
Capital  or  surplui.  achedak  of.  I.  IM.  I« 
Capital,  partnership.  I.  S48-SM 

Problem.  V.  116.  183.  187 
Corporate  dividends.  IV.  55-M 
Deferreff  credits.  IV,  ««-S< 

Problems.  V,  125.  \3i.  1S7.  180 
Deferred  debits.  IV.  12-23 

Problems.  V.  125.  132.  187.  180 
Fire  loss  (Sec  "Fire  loss  adjustmrnU'*) 
Intercompany.  IV.  365.  366 
Inventory  (See  "Inventory") 
Mercantile  budneaa,  illustrative  atJiteaenl, 

IV.  815 
Profit  determination.  IV.  33-54 
Reserves  and  funds.  IV.  104-118 
Sinking  fund.  IV.  160 
Stores,  II,  143;  III.  189 
Surplus,  I,  159;  IV.  95-103 

Problems,  V,  15,  16.  18.  21.  IM.  ISt,  IS7. 
148,  180,  266,  271.  284.  312 
Administrative  Expense.  I.  69;  II.  29A;  III. 

18.  98,  102,  168,  172.  187.  213.  220.  Ml 

(See    also    generally    "Labor,    iodirect," 

"Non-productive  departments") 
Account  illustrated. 

Textile  costs.  III.  896.  397 
Account,  process  system.  III.  166.  344 

Form.  III.  344 
On  distribuUon  sheet.  lO.  224.  tSS,  M0 
Production-center  system.  III.  291 

Account  illustrated.  III.  321 
Standing  expense. orders.  III.  2M 
Sub-departments.  III.  265 
Administrator,   II.   404    (See  •ko   **Cat«t« 

accounting") 
Advertising, 

Department.  II.  154 

Sales  department,  relation  to,  II.  IM 
Expense.  I.  65.  98.   113.  119;  II.  468;  UI. 

217.  220;  IV.  14.  27 
Good- will  value  of.  IV.  18.  254 
Mail-order  busineas.  II.  393 
Agencies.  II.  373 

Accounts  of.  II.  373.  374 
Home  office,  accounts  with.  II.  374 
Agent's  Orocb  Bu.\nk.  II.  391 


142 


GENERAL  INDEX 


Agbeement,  Pabtnebship,  II,  17 
Aids,  Mechanical,  II,  3,49-359 
Automatic  register,  II,  Z5(i,  357 
Billing  machine,  II,  169-171,  352 
Calculating  machine,  II,  S50-S52 
Cash  register,  II,  358 
Essential  requirements  of,  II,  349 
Importance  of,  II,  349,  350 
Numbering  ma  hine,  II,  358 
Photographing  machine,  II,  357 
Prevention  of  errors,  IV,  380-381 
Slide  rule,  II,  355 
Stamp  affix'jr,  II,  357 
Tabulating  machine,  II,  353-355 
Time  recorder,  II,  307-309,  358;  III.  176, 179 
Typewriter,  II,  356 
A  LA  Cabte  Dinivg  Room,  Checking  Sys- 
tem, II,  433-435 
Allowable  Deductions  Recobd,  II,  848 

Form,  II,  347 
Allowance  Joubnal,  II,  386 

Form,  II,  337 
Allowances, 
Discount  (See  "Discounts") 
Purchase  rebates  and,  account,  analysis  of, 

I,  434 
Returns  and. 
Analysis  sheet  of  allowances,  II,  126 

Form,  II,  125 
Journal  entries,  I,  184 
Refund  ticket,  II,  225 

Form,  II,  226 
Register,  II,  125 
Form,  II,  125 
Sales,  I,  99 

Rebates  and  allowances  account,  analysis 
of,  I,  411 
Alterations  ob  Additions, 

Expenditures  on,  capital  charges,  IV,  47,  61, 
235-237 
Alternate  Sales  System  fob  a  Small  Con- 
cern, II,  172 
Form,  II,  172 
Amebican  Institute  of  Accountants,  I,  14 
Amebican  Plan,  Hotel,  II.. 432 
Amobtization, 

Bonds,  IV,  128,  135 

Problems,  V,  146,  148 
Debt,  IV,  153 

Sinking  fund  method  compared  with,  IV, 
153,  154 


Analysis,  (See  also  "Accounts,  classification," 
"Schedule") 
Accounts, 

Credit  accounts,  I,  415-425 
Debit  accounts,  I.  399-414 
Expense,  indirect  (See  '  £xpeD<ie,   distribu 

tion") 
Pay-roll  (See  "Pay-roll") 
Anai-ysis  Sheets, 
Allowances,  II,  126 

Form,  II,  120 
Textile  costs  (See  under  "Textile  costs") 
Annuity,    IV,    144-154    (See    also    "Sinking 
fund") 
Amount  of,  IV,  146-148,  151-158 
Computation  of. 

Problems,  V,  146,  165,  166 
Comjx)und  discount,  IV,  149,  153 
Compound  interest,  IV,  144-146,  153 
Nature  of  problem,  IV,  9 
Principle  based  on,  IV,  144 
Future  worth,  IV,  146-148,  151,  153 
Present  worth.  IV,  148-151,  153 

Problem,  V,  146 
Rents  of,  IV,  146 
Applied  Rates  of  Expense  Distbibution, 
III,   212,   271-285    (See  also  under  "Ex- 
pense, distribution  over  product") 
Adjustment  between  actual  and.  III,  212, 
282-285,  295 
Appraisal  (See  "Valuation") 
Appbeciation, 

Fixed  assets,  IV,  96 
Land  values,  I,  325;  IV.  231 
Abticles  of  Partnership,  II,  13 
Articulation  Statement,  Defined,  IV,  413 
Assembly  Products,  III,  66 
Asset  and  Liability  Method  of  Determin- 
ing Profit  or  Loss,  I,  392,  393;  IV,  52 
Assets, 
Accounts.  I,  65 
Appreciation,  IV,  96 

Problems,  V,  66,  70 
Arrangement  on  balance  sheet,  IV,  281 
Ascertaining,  method  of,  I,  46 
Book  value,  I,  132,  133,  138 
Current,  I,  65;  IV,  215-229 
Accounts  receivable,  assignment  of,  IV, 

221 
Accounts  receivable,  valuation  of,  IV,  218 
Bad  debts,  accounting  for,  IV,  219 


GENERAL   INDEX 


148 


Assets — Continued 
Current — Continued 

Bad  debts,  reserve  for,  IV,  216 

Basis  of  valuation  of,  IV,  44,  45 

Classification,  IV,  215 
Problem,  V,  319 

Defined,  IV,  215 

Merchandise  inventory,  IV,  222 

Merchandise  inventory,  insurance  of,  IV, 
227,  228 

Merchandise  inventory,  pricing  of,  IV,  224 

Nature  of,  IV,  215 

Stock-in-trade,  IV,  223,  227 

Stocks  and  bonds  as,  IV,  334,  335 
Deferred  expense,  I,  65 
Defined,  I,  20,  21 

Depreciation,  I,  315;  IV,  12  (See  also  "De- 
preciation") 
Disposition  of. 

Losses,  I,  35 

Payments,  I,  35 

Withdrawals,  I,  35 
Estate  accounting  for,  II,  405-407 
Existence  of,  verification  of,  IV,  419 
Fixed,  I,  62,  65;  IV,  230-238 

Basis  of  valuation  of,  IV,  44,  45 

Buildings,  IV,  234-237 

Changes  in  valuation  of,  IV,  96 

Land,  IV,  231-234 

Machinery  and  equipment,  IV,  237,  238 

Nature  of,  IV,  230 

Reserve  for  depreciation  on,  IV,  115 

Sale  of,  I,  112 

Securities  owned  for  purposes  of  control, 
IV,  335 

Valuation,  effect  of  depreciation  on,  IV,  49 

Verification  of,  IV,  428 
Floating  (See  subheading  "Current, "above) 
Intangible,  I,  393,  394;  IV,  250-264 

Copyrights,  IV,  261 

Franchises,  IV,  263 

Good-will,  IV,  250-257 

Nature  of,  IV,  250 

Patents,  IV,  257-260 

Royalties,  IV,  262 

Trade-marks,  IV,  260 

Trade  secrets.  IV,  261 
Liquidation,  I,  146-148 
Plant  (See  "Plant") 
Recording,  illustrated,  I,  62,  63 
Replacement    of    (See    "Repairs    and    re- 
newals") 


AsBcn—  CorUin  tud 

Revaluation,  relation  to  Burplttt.  IV.  1 
Single-entry  bookkeeping  (Sm 

ing.  singles  itry  *) 
Sources  of.  I,  S4,  35 
Creditors,  I.  S4,  35 
Profits.  I,  31.  34.  35 
Proprietor.  I,  34.  S5 
Surplus  from  sale  of.  IV.  M 
Tangible   and   intangible,   ^nffa-eatry.    t. 

393.  394 
Valuation  of,  IV.  7,  41-~45.  168.  tlS^fiO 
Problems,  V.  15.  16.  18 
Data,  sources  of,  IV,  45 
Insolvency.  I.  132.  138;  IV.  SW 
Kinds  of,  IV.  42.  43 

Knowledge  required  by  aecottntABt  lor, 
IV,  7 
Verification  of. 

Existence  of  asset,  IV,  419 
Importance  of,  IV,  417 
Ledger  account,  IV,  418 
Wasting. 

Accounting  for,  IV,  239 

Problem,  V.  207 
Definition  and  treatment.  IV.  tS8 
Distinguished  from  depreciation,  IV,  t9# 
Reserve  for,  IV,  115 
Assets  and  Liabilities.  STATKMB!rr  or.  I, 
46-49     (See     also     "Balance    abect.'* 
"Statements") 
Forms,  I.  46-49 
Problem.  V,  336 
Assignees  (See  "Receiveri") 
Attorneys'     Accounts     (See    "Proliwinnal 

accounts") 
Auditing,  I,  9,  10;  II.  6;  IV.  S 

Necessity  for,  I,  74 
Auditor,  Functions  or,  I,  10 
Automatic  RsaisTrJi.  II.  S5<l.  357 
Automobile  Factor  r. 
Inventory  sheet.  III.  121 
Form.  III.  120 
Averages.  Theory  or. 

Applied  to  accrued  liabtUtica.  IV.  H 
Applied   to  keeping  books  oo  cask 
IV.  20 

B 

Bad  Debts  (See  "Debta,  b^d") 
Balance, 

Account,  I,  44 


144 


GENERAL   INDEX 


Balance — Continued 
Bank, 
Interest  on,  I,  111 
Reconciliation  of,  I.  225-227;  IV,  425 

Problems,  V,  3,  4 
Verification  of,  IV,  425 
In  hand  and  on  deposit,  I,  108 
Trial,  locating  differences  in,  IV,  405-410 
Balance  Division  of  Stores  Ledgeb,  II, 

142,  143 
Balance  Sheet,  I,  58,  59,  102,  116-128;  H, 
289;  IV,  279-293  (See  also"Statements") 
Account  form,  I,  117;  IV,  285 

Forms,  I,  118,  337;  IV,  286,  287 
Accounts,  II,  264 

Arrangement  of  content,  I,   117-123;  IV, 
281-287 
Assets,  I,  117-119;  IV,  281 
Capital,  I,  117-120;  IV,  283 
Liabilities,  I,  117-120;  IV,  282 
Purpose  to  be  served,  factor  in,  IV,  281 
Comparative,  IV,  288 

Problem,  V,  253 
Condensed  form,  IV,  285 
Form,  IV,  286,  287 
Problem,  V,  395 
Consolidated,  IV,  353-375 

Problems,  V,  277,  304,  312,  319,  328 
Advances  to  subsidiaries,  IV,  373 
Complications,  suggestions  for   avoiding, 

IV,  356-358 
Good-will,  IV,  361 

Problems,  V,  202,  277,  328 
Illustrative  statements,  IV,  354-356 
Income  tax  regulation,  IV,  353 
Investment     accounts,     substitution     of 

assets  and  liabilities  for,  IV,  356,  358 
Liabilities  and  deficit  of  a  subsidiary,  IV, 

373 
Method  of  consolidation,  IV,  354 
Minority  interest  of  subsidiaries,  IV,  372, 
373 

Premiums,  IV,  361 
Problems,  V,  300,  328 

Profits  of  subsidiaries  prior  to  consolida- 
tion, IV,  359-360 

Purpose,  IV,  353 

Surplus  adjustments,  I,  159;  IV,  95-103 
Problems,  V,  284,  312 

Surplus  and  dividends  of  subsidiaries,  IV, 
872 


Balance  Sheet — Continued 
Consolidated — Continued 

Surplus  of  subsidiaries,  IV,  361,  363 

Problem,  V,  304 
Surplus  of  subsidiaries,  when  stock  only 
partly  acquired,  IV,  363 

Contingent  liabilities,  I,  120;  IV,  288 
Corrected,  I,  126 

Form,  I,  126 
Date  of,  I,  122 
Deferred  charges,  I,  118,  119 
Deficit,  showing  of,  I,  119;  IV,  284 

Problems,  V,  271,  304 
Defined,  I,  116;  IV,  279 
Depreciation  reserve,  I,  318 

Problem,  V,  271 
V    Dividends,  cumulative,  unpaid,  IV,  291 
Entry  of  inventory  accounts.  III,  79 
Federal  Reserve  Board  form,  IV,  287 

Form,  IV,  288,  289 
Form  of,  IV,  280 

English,  reverse  of  American,  IV,  280 
Holding  company,   IV,   340-352   (See  also 
subheading  "Consolidated,"  above) 

Compared     with     consolidated     balance 
sheet,  IV,  340 

Complications,  IV,  343,  344 

Illustrative    statements,    IV,    341,    342, 
347-349 

Method  of  showing  investments   in   the 
subsidiaries,  IV,  347 

Methods  of  presentation  compared,   IV, 
344-347 

Necessity  for  consolidated  balance  sheet, 
IV,  343 

Objection  to,  IV,  350 
Illustrative  form,  IV,  285-287 
Importance  of,  IV,  279 
Inadequacy  of,  for  insolvents,  I,  130,  131 
Incorrect  form  of,  I,  121 

Form,  I,  121,  122 
Ledger  balances,  correct  showing  of,  IV,  291 
Liabilities, 

Contingent,  I,  120;  IV,  288 

Notes  receivable  discounted,  IV,  288 

Showing  of,  I,  117-120;  IV,  282 
Manufacturing  company,  illustrative  state- 
ment, IV,  304 
Mercantile  business,  illustrative  statement, 

IV,  311 


V 


GENERAL  INDEX 


145 


Balance  Sheet — Continued 

Notes  due  from  or  payable  to  proprietors  or 

corporation  officials,  IV,  291 
Purpose  of,  I,  110;  IV,  281 
Real  and  personal  accounts,  I,  58,  59 
Receiver's,  I,  143,  149 

Form,  I,  151  ■ 

Report  form,  I,  117;  IV,  286 
Forms,  I,  103,  118,  119 
Problem,  V,  45 
Representing  insolvency,  example  of,  1,  134, 
135 
Form,  I,  134,  135 
Reserves,  showing  of,  IV,  284 
Special  points,  IV,  288 
Stock  brokerage,  II,  428-431 
Tie-up  with  income  statement,  IV,  292 

Problems,  V,  132,  221,  336 
Treasury  stock  on,  IV,  208 
Problems,  V,  152,  277 
Bank, 

Account,  charge  for,  I,  223 
Balance, 

Interest  on,  I,  111,  220 
Reconciliation  of,  I,  225-227;  IV,  425 

Problems,  V,  3,  4 
Verification  of,  IV,  425 
Columns  in  cash  book,  I,  228 
Depositors  ledger,  II,  253 

Form,  II,  252 
Statement,  I,  224,  225 

Form,  I,  224 
Stock,  IV,  200 
Surplus, 

Creation  of,  IV,  96 

Distinguished  from  undivided  profits,  FV, 
97,  98 
Transfers,  recording,  I,  228,  229 
Bankers'      Investments      in      Corporate 

Stocks,  IV,  334 
Bankruptcy, 

Accounts  and  reports  of  trustees,  IV,  322 
Appraisal  of  property,  1, 132;  IV,  322 
Deficiency  statement,  I,  140,  141;  IV,  319. 
326  I 

Problems,  V,  61,  66,  70 
Priority  of  debts,  IV,  323 
Realization   and   Hquidation  statement,   I, 
142-152  (See  also  "Realization  and  liqui- 
dation statement") 
Form,  I,  145 
Referees  in,  IV.  321 


Bankroptct— ConlmiMrf 

Statement  of  affairs,  I.  ItO-Ul;  IV.  tU.  N* 

(See  also  "Statement  ol  tJUinT) 
Trustees  in. 

Problems.  V,  78,  83 
Appointment  and  duties.  I.  I4f ;  IV.  tit 
Betterments.   PBoriTii   ExrnrDKO  Poa.  «• 

Basis  or  Dividcnm.  IV,  91 
Bill  or  Material,  III.  135.  304 

Form.  III.  135.  304 
Billing  Machine,  ll,  100-171.  8M 
Department  store  work.  If.  170.  171 
Invoices,  making.  II.  169.  55i 
Bills  or  Exchange.  I,  295 
Bin  Tag.  III.  132 

Form.  III.  133 
Block  System  or  CLABSincATioN,  HI.  IM 
Blotter, 

Attorney's  office.  II.  390.  397 

Form,  II,  397 
Stock  broker's.  II.  420-423, 
Forms,  II.  421 
Boiler  Insurance,  III.  238 
Bond  Dividends.  IV,  74,  92 
Bond  Tables,  Use  of,  IV,  9 
Bonds,  (See  also  "Securities") 
Account,  analysis  of,  I.  418 
Accounting  for.  IV,  132-142 
Investment,  IV,  132-139 
Issues,  IV,  139-142 

Problems.  V,  140.  140.  148.  152.  !«• 
Accumulation  defined.  IV.  129 
AmortizaUon.  IV.  128-131.  135 

Problems,  V.  146.  148 
As  current  assets  of  certain  corporalioM. 

IV,  334.  333 
Brokerage  on,  IV.  123 
Classification  of,  IV,  122 
Corporate.  IV,  121 
Coupon.  IV.  122.  123 
Defined.  IV,  121 
Denomination  of.  IV,  122 
Discount.  IV,  9.  124.  137,  141 

Problems.  V.  152.  100.  215. 177 
Account,  analysis  of.  I.  407 
Accounting  for.  IV.  137.  138.  141 
Distinguished  from  notes,  IV,  It* 
Distinguished   from  real  MUto  hamd  aad 

mortgage.  IV.  121 
Interest  (See  "Interest") 
Investment  value,  rakulatton  ol.  IV,  ISf- 
142 


146 


GENERAL  INDEX 


B  ONDS — Continued 
Investments  in. 

Balance  sheet  treatment  of,  IV,  SS5 
Journal  entries,  IV,  136 
Problem,  V,  148 
Issue, 

Discount,  IV,  141 
Entries  in  books,  IV,  139,  140 
Interest,  IV,  140 
Premium,  IV,  141 
Owned,  account,  analysis  of,  I,  404 
Par  value,  IV,  123 

Premium,  IV,  9,  124,  125,  134,  135, 141 
Problems,  V,  148,  300 
Account,  analysis  of,  I,  419 
Accounting  for,  IV,  135 
Price,  IV,  123,  124 

Factors  determining,  IV,  124 
"Market  value,"  IV,  124 
Profit  and  loss  on  sales,  IV,  138 
Real  estate  distinguished    from  corporate, 

IV,  121 
Redeemable  at  face  value,  IV,  124 
Registered,  IV,  122 
Sale  of,  profit  and  loss  on,  IV,  138 
Schedule  of  investment,  I,  159 
Security  for,  IV,  122 
Sinking  fund,  to  provide  for  retirement  of 

(See  "Sinking  fund") 
Term,  IV,  122 
Trust  deed  securing,  provisions  of,  FV,  155, 

157 
Trustee,  IV,  121,  157 
Unissued,  IV,  140 
Value,  computing,  IV,  124-126 

Investment  value  method,  IV,  132-139 
Bonus  On  Total  Purchases,  I,  277 
Bonus  Stock,  IV,  209 
Bonus  System  or  Wage  Payment,  II,  305; 

m,  204 
Book  of  Original  Entry    (See  "Books  of 

account") 
Book  Value,  I,  132,  133,  138 
Bookkeeper, 
Defined,  1,  16 

Duties  of,  interlocking  accountant's  duties, 
I,  6,  7,  16 
Bookkeeping, 

Double-entry,  I,  38-45 
Cost  accounting,  II,  461 


Bookkeeping — Continued 
Double-entry — Continued 
Purposes  of,  I,  79 
Value  of,  I.  175 
What  must  be  shown,  I,  38 
When  should  be  used,  I,  38 
Kinds  of,  I,  38 

Machine  (See  "Billing  machine") 
Records,  primary  purposes  of,  I,  24 
Relation  to  advanced  accounting,  IV,  3 
Single-entry,  I,  38,  377-395 
Cash  book,  I,  382-384 

Form,  I,  383 
Day-book,  I,  378-381    (See  abo   "Day- 
book") 
Form,  I,  379 
Fundamental  characteristic,  I,  377 
Inadequacy  of,  I,  394 
Ledger,  I,  381,  382 

Form,  I,  382 
Ledger  accounts,  insufficiency  of,  I,  385 
Profit  and  loss,  methods  and  formulas  for 

determining,  I,  389-394 
Statement  of  condition,  I,  385-389 

Forms,  I,  387,  388 
Summary  of  changes  of  assets  and  liabili- 
ties, I,  389 
Form,  I,  389 
Tangible  and  intangible  assets,  I,  393,  394 
When  may  be  used,  I,  38 
Books  of  Account,  (See  also  "Records") 
Columns, 

Entering  items  in,  II,  58 
Figures  in,  arrangement  of,  11,  57 
Use  and  number  of,  II,  57,  58 
Defined,  I,  16 
Grouping,  II,  36,  37 
List  of,  U,  35,  36 

Original  entry,  I,  39,  40;  II,  7,  27-29,  46,  47. 
231,  232,  247 

Form,  II,  231 
Defined,  I,  39 
Development  of,  II,  27-29 
Entering   business   transaction,   example, 

I,  40 
Errors  occurring  in,  I,  73,  74 
Form  of,  II,  47 
Functions  of,  II,  46,  47 
Purposes  of,  II,  232 
Subsequent  entry,  II,  7   (See  also  "Ledger") 


GENERAL   INDEX 


147 


Branch  Stores,  II,  374-388 

Problems,  V,  106,  108,  119,  140.  253 
Accounting  system  for,  II,  377-388 
Accounts  of,  methods  of  keeping,  II,  375 
Books  and  records,  II,  380-388 

Forms,  II,  382-388 
Classification  of  accounts,  II,  378,  379 
^  Home  office  accounts  with,  II,  376 
Ledger  accounts,  arrangement  of,  II,  379, 

380 
Shipments  between,  II,  377 
Breakfast-Food  Factory,  III,  42 
Brick  Manufacturing  Plant,  III,  46,  50, 
87,  328-348  (See  also  under  "Process  cost 
system") 

Brokerage  on  Bonds,  IV,  123 

Brokers'      Investments      in      Corporate 

Stocks,  IV,  334 
Budget,  II,  316-333 
»        Approval  of,  II,  322 
Defined,  II,  316 
Estimate  of — 
Costs,  II,  321 
Expenditures,  II,  321,  322 
Needs  of  business  as  a  whole,  II,  322,  323 
Revenue,  II,  320,  321 
Importance  of. 
General,  II,  317 

To  organization  officials  in  lesser  capac- 
ities, II,  318 
To  the  executive,  II,  317,  318 
Institutional,  illustrated,  II,  325-327 
Lump  sum,  II,  316,  317 
Modifications,  II,  322 
Plan,  basis  of,  II,  323 
Preparation  of,  II,  318-320 

Points  to  be  considered,  II,  319 
Schedule,  II,  323,  324 

Form,  II,  324 
Segregated,  II,  316 

Trading  business,  illustrated,  II,  327-333 
Building  and  Construction  Companies, 
Stocks   of   other   corp)orations   received   on 
payment  for  services,  IV,  334 
Building  Expense,  III,  230,  237 
Account, 

Analysis,  I,  409 

Production-center  system.  III,  289,  319 
Textile  costs,  III,  395 
Maintenance    (See   also    "Repairs   and   re- 
newals") 


Bdildino  ExpttTtnt—ConHntud 
Maintenance — ConHnutd 

Chargeable  to  capitaJ.  when.  IV.  «7   fi 

236,  237  *      * 

Depreciation  and,  IV.  167 
Buildings  (Src  "Plunl") 
Burden  (See  "Expeate") 
Business, 
And    proprietor,    relationaliip    brt»««a     | 

19,  20 
Control,    types   of,    II,    l«,    is    (8w   nhrt 
"Organization") 
Corporation.  II,  IS,  18  (See  aim  "Corpors. 

tion") 
Partnership,  II.  IS.  17  (See  alw  **Pkrta«7. 

ship") 
Proprietorship.  II.  IS 
Cost  of  doing,  II,  304 
Information,  recording,  I.  24,  fS 
Mail-order  (See  "Mail-order") 
Manufacturing    (See    "Manufactariag   tn- 

terprise") 
Object  of.  II.  364 
Operation  of. 
Accounting.  II,  11,  12  (See  alM  **Acco«uit. 

ing") 
Financing,  II,  11,  12 
Fundamental  divisions  of.  II.  10 

Form.  II.  1 1 
Office  administration.  II,  II,  li 
Producing,  II.  10 
Selling.  II.  10 
Organization.  II.  ^2S  (See  abo  **OfaBit». 

tion") 
Planning  accounting  system  for.  II.  9i-41, 
2S6  (See  also  subheading  "Stayry  of.'* 
below) 
Installation,  time  for.  II.  48 
Ledger  accounts,  II,  46  (See  a!ao  "Lm!- 

ger") 
Officials  and  employee*,  co-oprralion  of, 

11.44 
Organization  plan.  II.  iS 
Outlining  plan.  II.  42 
Records  of  original  entry,  II,  46.  47  (9*« 
also  "Books  uf  account.  oHcinaJ  r«try") 
Subsidiary    and    auxiliary    rrcurtK     II. 

47.  48 
Supervision,  provision  for.  II.  30 
Retail  (S<*e  "Retail  organisation") 
Rules  for  office  routine.  II,  49.  30 


148 


GENERAL   INDEX 


B  usiNESS — Continued 

Statement  of  a  going,  I,  47-49 
Survey  of,  II,  32-41 
Accounts  in  use,  II,  38 
Books  in  use,  II,  35,  36 
Character  of  business,  II,  33 
Object  of,  II,  32,  33 
Preliminary  considerations,  II,  32 
Records,  grouping,  II,  36-38 
Specific  cases,  II,  39 

Trading  and  manufacturing  records,  com- 
paring, II,  34,  35 
Working  papers,  II,  40,  41 
Trading  (See  "Trading  business") 
Transaction, 

Analysis  of  a,  I,  39 
Changes  in,  recording,  I,  49 
Factors  involved  in,  I,  39 
First  entry  of,  I,  39 
Wholesale,  II,  152-154,  268,  363-372 
Classification  methods,  II,  268 
Combined  with  retail,  II,  152-154 
Cost  accounting  for  (See  "Cost  accounting 

for  trading  enterprise") 
Sales  book,  II,  171 
Business  Corporations  Law,  II,  20 
Business  Executives  (See  "Executives,  busi- 
ness") 
By-Froducts,  III,  147 


Calculating  Machine,  II,  350-352 
Listing,  II,  352 
Non-listing,  II,  351 

Purchasing,  points  to  observe  in,  II,  352 
Candy  Factory,  Cost  System,  III,  13 
Capital,  I,  28-36;  IV,  283 
Account,  I,  67 

Closing  drawing  account  into,  I,  100, 101 
Closing  profit  and  loss  into,  I,  83-86 
Partnership  adjustments,  I,  348-350 
Problems,  V,  116,  183,  187 
Accountant's  point  of  view  of,  1,  30 
Accounting  definition  of,  I,  22,  28 
Additions  to,  I,  35,  36,  112 
Adjustments,  schedule  of,  I,  159,  160 
An  accountability,  not  a  liability,  I,  120; 

IV,  283 
Ascertaining,  method  of,  I,  46 
Balance  sheet  presentation  of,  IV,  283 


Capital — Continued 
Changes  in. 

Adjustments  of,  I,  159,  160 
Causes  of,  I,  35,  36 
Example  of,  I,  36 
Factors  of,  I,  389 
Summary  of,  I,  34-36 
Contributions,  single-entry  statements,  1,31, 
32,  112,  390-392 
Problem,  V,  90 
Decrease  in,  single-entry  statements,  I,  332 

Problem,  V,  97 
Deductions  from,  I,  35,  36 
Dividends  not  to  be  paid  from,  IV,  57 
Economic  definition  of,  I,  29,  30 
Expenditures, 

As  related  to  profits,  IV,  61 
Compared  with  revenue  expenditures,  IV, 
45-49,  61,  97,  235-237 
Problem,  V,  132 
Defined,  IV,  46 

Maintenance — repairs,  renewals,  and  re- 
placements,  IV,   47    (See  also  "Repairs 
and  renewals") 
Expenses,  IV,  296,  297  (See  also  subheading 

"Expenditures,"  above) 
Income  and  expense,  I,  99 
Incorrectly  defined,  I,  33 
Nature  of,  I,  120 
Net  worth,  I,  29 
Problem,  V,  61 
Or  deficit,  determining,  I,  46-52 
Method  of,  I,  46,  47 
Subsequent  facts,  recording,  I,  49-51 
Partnership  (See  "Partnership") 
Profit,  IV,  34,  35 
Profit  balance  retained  as,  IV,  95 
Withdrawals  of  (See  "Withdrawals") 
Working,  I,  124 
"Capital"  Assets  (See  "Assets,  fixed") 
Capital  Stock  (See  "Stock,  capital") 
Card  Ledger,  I,  260 
Card    System,    Law   Offices,    Laying    out 

Daily  Work,  II,  397,  398 
Cards,  II,  66,  67 
Index,  II,  67 
Job,  II,  307,  309 
Time  (See  "Time  card") 
Cash, 
Account, 

Analysis  of,  I,  401 


GENERAL  INDEX 


149 


C  ASH — Contin  ued 
Account — Continued 
Receiver's,  I,  149 
Form,  I,  150 
Accountability,  retail  organization,  II,  36ff 

368 
Balance,  I,  194,  195 
Testing,  I,  195 
Verifying,  I,  225-227 
Book  (See  "Cash  book,"  below) 
Carrier  system,  distribution  of  expense  of, 

II,  467,  468 
Defined,  from  accounting  viewpoint,  II,  190 
Disbursements, 
Attorney's,  II,  401 
By  check,  II,  192 

Identification  of  payments,  I,  193,  194 
Journal  entry,  I,  183,  184 
Petty  cash,  II,  192,  217 
Proof  of  payment,  I,  193,  194 
Record,  hotel,  II,  441 

Form,  II,  442 
Register,  mail-order  house,  II,  393 

Form,  II,  394 
Statement  of,  I,  104-115  (See  also  "State- 
ments, receipts  and  payments") 
Discounts  (See  "Discounts,  cash") 
Distribution  sheet,  II,  226,  227 

Form,  II,  227 
Dividends,  IV,  72,  82,  83 
Journal  (See  "Cash  book,"  below) 
Memorandum  for  goods  returned,  II,  225 

Form,  II,  226  , 

Methods  of  handling  accounts,  IV,  19 
Petty, 

Problem,  V,  7 
Account,  analysis  of,  I,  401 
Book,  I,  231;  II,  218-220 

Form,  n,  219 
Defined,  I,  191,  229 
Distinction  between  cash  and  petty  cash, 

I,  191 
Fixed  fund  and  account,  II,  217,  218 
Imprest  system,  I,  229-231;  II,  192,  217 
Items  of  similar  kind,  handling,  II,  221 
Vouchers,  II,  220,  221 
Form,  II,  220 
Purchases,  I,  113;  II,  122 
Realization  and  liquidation  statement,  1, 147 
(See   also    "Realization    and   liquidation 
statement") 


Cahu— Continued 

Recapitulation  record.  II,  fn 
Form.  II.  211 

Receipts  and  paym-nt*. 
Separate  Inxik  for.  I,  100 
Statement  of.  I.  10*-l|3  (See  •'»  •'Suir. 
ments,  receipt*  and  p«yuj.nwi  > 
Receipts.  dfpf)sit  of.  J,  193;  I.'.  1  >J 
Receipts  register.  U,  206-iOO 
Form,  II.  208 
Hotels.  II,  440 
Form,  II,  4^\ 
Mail-6rder  house,  II,  393 

Form,  II,  394 
Reasons  for  use  of,  II.  407 
Use  of  two  or  more  at  sanM  line.  II.  t07. 
209 

Records,  II.  18^230 
Development  of.  II.  191 
General,  II,  189-210 

Forms.  II.  193.  199.  80«.  205.  108,  til. 
213,  214 
Miscellaneous,  II,  222-230 
Forms,  II,  224.  22r»-229 
Petty  cash.  II,  217-221 

Forms,  II,  219.  220 
Separate,  reasons  for,  II.  189-191 
Refund  ticket,  II,  223 

Form,  II.  226 
Register,  II.  177,  21.^  358 
Report,  daily.  II.  227,  228 

Form.  II.  228 
Sales  (See  "Sales,  cash") 
System,  essentials  of.  II.  \99 
Verification.  IV,  421-425  (See  »!»  **Vrnfie». 
tion") 
Bank  balance.  IV.  425 
Cash  in  hand.  IV.  421 
Payments.  IV.  423  * 

Receipts,  IV,  422 
Cash   Book,   I,    188-197.   215  217.   S8t-»4: 
II.  26,  27,  190-200 
Accepted  as  evidence  in  ct»urt«,  II.  *7 
Arrangement  of  entries,  I.  189.  IBO 
Balance,  reconciliatiun  with  bank 
I,  225-227 
Problems.  V.  3.  4 
Entry  in  cash  book.  I.  2t6.  NT 

Form.  I.  227 

Method.  I.  226 

Bank  columns.  I.  228 


150 


GENERAL   INDEX 


Cash  Book — Continued 
Charitable  institution,  II,  204-206 

Form,  II,  205 
Closing,  I,  195-197 

Columnar,  I,  215-217,  284,  328;  II,  196,  197 
Forms,  I,  216,  217,  288,  289,  330,  331 
Chain  stores,  II,  381 
Forms,  II,  385 
Controlling  accounts  in,  II,  200 

Form,  II,  199 
Dates,  entering,  I,  192 
Development  of,  II,  28,  29 
Discount  colunm,  I,  215-217,  279,  280;  II, 
198-200 
Forms,  II,  199 
Entries,  I,  284-293;  II,  195,  196 
Footings,  I,  192 
Function  of,  II,  190 
General,  for  mercantile  concern,  II,  201-204 

Form,  II,  202 
Headings,  I,  284,  285 
Modern,  development  of,  I,  215 
Not  a  ledger  account,  II,  194 
Petty  cash,  I,  231;  II,  218-220 
Form,  II,  219 
Chain  stores,  II,  381 

Form,  II,  386 
Posting  from,  II,  218,  220 
Posting  to  ledger,  I,  196,  291-293 
Private,  II,  228 
Form,  II,  229 
Receipts  and  payments,  separate  books  for, 

I,  190 
Ruling  of,  I,  284,  285;  II,  261 
Simple,  I,  191;  II,  193 

Forms,  I,  191;  II,  193 
Single-entry  bookkeeping,  I,  382-384 

Form,  I,  383 
Treated  as  ledger  account,  I,  190 
Where  no  creditors  ledger  is  kept,  II,  122 
Form,  II,  121 
Castings,  III,  50 
Catalogue  File,  II,  76 
Catalogue,  Stores,  III,  161 
Cement  Manufacture,  III,  88,  92 
Certified  Public  Accountants,  I,  13,  14 
Chain  Stores  (See  "Branch  stores") 
Charge  Slip,  Hotel  Guest,  II,  438,  439 

Form,  II,  439 
Charges  (See  "Costs") 
Chabqes,  Deferred  (See  "Deferred  debits") 


Charitable  Institution, 
Cash  book,  II,  204-206 

Form,  II,  205 
Pledge  record,  II,  841 
Form,  II,  341 
Charts, 

Accounts,  III,  20 

Forms,  III,  20,  21 
Production-center  system.  III,  310 
Form,  III,  312,  313 
Elements  of  selling  price.  III,  25 

Form,  III,  25 
Expense  accounts,  III,  212 

Forms,  III,  19,  20,  214-216 
Production-center  system.  III,  310 
Form,  III,  312,  313 
Graphic,  III,  405-418;  IV,  399-401 
Advantages,  III,  405 
Comparison  of  expenses,  IV,  401 

Form,  IV,  400 
Difference,  III,  406-409 

Forms,  III,  408,  416 
Pay-roll,  III,  191 

Forms,  III,  192,  193 
Plotted  from  statements.  III,  414,  415 
Ratio,  III,  406,  410-418 
Forms,  III,  413,  418 
Production-center  system,  HI,  303 
Form,  III,  303 
Accounts,  III,  310 
Form,  III,  312,  313 
Value  of,  II,  295 
Check, 

Canceled,  I,  241 
Exchange  Charges,  I,  218,  219 
Exchanged,  I,  219,  220 
Method  of  entry  on  bdbks,  I,  193,  194 
Proof  of  payment,  I,  193 
Register,  II,  209-211 
Form,  II,  208 
Functions  of,  II,  210 
Separate  for  each  bank,  II,  210 
Void,  I,  223 

Voucher  (See  "Voucher") 
Check-marking  Corrections,  IV,  434-436 

System  of  check-marks,  IV,  435 
Checking  or  Proving  Figures,  III,  96 
Church  Pledge  Record,  II,  341 

Form,  II,  3il 
Classification, 
Accounts  (See  "Accounts,  classification") 
Expense,  indirect.  Ill,  213 


GENERAL  INDEX 


151 


Classification — Continued 
Invoices,  indirect  expense.  III,  217 
Subsidiary  ledger,  III,  218 
Form,  III,  219 
Labor,  III,  166-168 
Labor,  indirect.  III,  221 
Material  requisitions.  III,  131,  136 
Parts,  III,  305 
'  Standing  expense  orders.  III,  229-232,  267 
Numerical  system.  III,  229-232,  267 
Form,  III,  230 
Stores,    III,    122,    138,    153-162    (See   also 
"Stores,  classification") 
Clay  Products    (See   "Process  cost  system, 

brickmaking  plant") 
Clayton  Act  of  1914,  IV,  333 
Cleaning  Factory,  III,  221,  226 
Clearance  Sheet,  II,  417 

Form,  II,  418 
Clearing  House, 

Stock  exchange,  II,  416,  417 
Ticket,  II,  416 
Clock  Card,  II,  306-309;  III,  167,  168,  176 

Form,  III,  181 
Closing  Entries  (See  "Entries,  closing") 
Closing  Factory,  III,  42 

Piece-work  time  record.  III,  185 
Form,  III,  186 

Cloth  Manufacture  (See  "Textile  costs" 
Clubs,  II,  446-452 

Accounting  for,  character  of,  II,  446 
Accounts, 

Classification  of,  II,  446-448 
Closing,  II,  452 
House,  II,  450,  452 
Dues,  II,  449 
Fees,  initiation,  II,  449 
Life  membership,  II,  449 
Membership  ledger,  II,  452 

Forms,  II,  451 
Records  required,  II,  253,  448 
Subscriptions,  special,  II,  452 
Unprofitable  activities,  II,  449,  450 
C.  O.  D., 

Register,  II,  391,  392 
Sales,  I,  110,  254;  II,  181-183 
Route  ledger,  II,  183 

Form,  II,  182 

Route  sheet,  II,  181 

Form,  II,  182 


CoiNsuRANcc  Clauss,  IV.  i6»-tn  (8m  alM 

"Fire  loss  adjustmenU'*) 
Apportionment  of  liability.  IV,  tTO 
Defined.  IV.  260 
Object  of,  IV,  269 
CoiNSUBia,  IV,  269  ' 

Collection  Accouim,   Attcmimbt'a.  II.  40t 
Columns;  Ruunos  and.  II.  5^M  (Sec  a.'«D 

"Journal,  columnar") 
Combinations  and  CoNsouDA-noim, 

Problems,  IV,  S67-S71:  V.  «W.  m,  tSI. 
284,  288.  293.  SCO.  304.  SI 2.  910.  HS 
By  lease  of  property.  IV.  S32,  S37 

Difficulty  of  valuing  leaw.  IV.  337 
By  purchase  of  property.  IV,  332.  336,  337 
Account  illustrated.  IV,  33«,  337 
Distinguished  from  boldiog  compuqr,  IV, 
383 
Causes  leading  to,  IV,  330 
Consolidation,  IV,  339 
Dividends  (See  "Dividends") 
Growth  and  development  of.  IV,  SSO 
Holding  company,  333-352  (See  also  **Iiol4|. 

ing  company") 
Methods  of,  IV,  830-330 
Pools  and  gentlemen's  agreements,  IV,  SSI 
Special  points,  IV,  371-375 
Trusts,  IV,  381 

Working  capital  provided  by  subsultanei^ 
IV,  371 
Combined  Process  and  Ohokb  Mbtboo  cm 

Cost-Finding.  III.  48 
Commercial    Accounting    Distinct    moM 

Cost  Accounting,  III,  4 
Commission, 

Merchant's  consignment  register.  11,  *U. 

348 
Salesmen's.  II,  340.  341 
Community  Associations,  fob  Combixatkmv 

of  Corporations,  IV.  331 
Comparative    Statement    or    PnoriT    A>f» 
Loss,  II,  294;  IV.  300 
Federal  Reserve  Board  form.  IV.  SCO 
Form.  IV.  300.  301 
Comparison  or  Costs  at  Vabiocs  rKStooa, 

III.  66 
Compensating  Eiuioiis.  I.  73 
Competition,  Ignorant,  Dub  to  Ij«co««crr 

Cost  Calculation,  III.  6 
Composite    Life    Mbtmoo,    DwrmmnAywm 
Rates.  IV.  177.  178 
Problem,  V.  168 


152 


GENERAL   INDEX 


Compound  DiscotiNT,  IV,  149,  153 

Rule  for  finding,  IV,  153 
Compound  Interest,  IV,  144-146,  153  (See 
also  "Annuity") 
Rule  for  finding,  IV,  153 
Compound  Interest  Tables,  Use  of,  IV,  9 
Compound  Products,  III,  54-69 

Form,  III,  57,  59 
Consignee,  Sales  Book  for,  II,  180 

Form,  II,  176 
Consignment, 

Register,  II,  345,  348 
Sales  on,  II,  177-179 

Sales  book  for  consignee,  II,  180 
Form,  II,  176 
Consolidated  Balance  Sheet  (See  "Balance 

sheet,  consolidated") 
Consolidated  Income  Statement, 
Eliminations,  IV,  365 
Intercompany  adjustments,  IV,  3C5,  366 
Intercompany  profits,  treatment  of,  IV,  366 
Consolidation  (See  "Combinations  and  con- 
solidations") 
Construction  Work,  II,  313,  314;  IV,  36 
Anticipation  of  profits,  IV,  36 
Employment  record,  II,  313 
Local  conditions  to  be  observed,  II,  313 
Recording  workmen's  time,  methods  of,  II, 
313 
Constructive  Accounting,  I,  7 
Containers, 

Accounting  procedure  for,  II,  183-185 
Column  in  sales  book,  II,  183 

Form,  II,  184 
Sale  of,  I,  253 
Contingencies,    Reserve    for     (See    "Re- 
serves") 
Contingent     Liabilities    (See    "Liabilities, 

contingent") 
Contract,  (See  also  "Contractors,  building") 
Cost  sheet,  II,  454 

Form,  II,  455 
Filing,  II,  454 
Numbering,  II,  454 
Profit  and  loss,  II,  459 

Estimated  profits,  II,  459 
Register,  II,  454 
Subcontract, 

Payment  sheet,  II,  454 

Form,  II,  455 
Payments,  II,  458 
Register,  II,  454 


Contractors,  Bttildinq,  H,  453-460  (See  also 

"Contract") 
Charges  to  owners,  periodical,  II,  458,  459 
Labor,  accounting  for,  II,  457,  458 
Material, 

Accounting  procedure  for,  II,  457 

Requisitions,  II,  457 
Pay-roll, 

Preparation  of,  II,  457 

Voucher,  II,  458 
Records  required,  II,  453 
Subcontractors,  II,  453 
Voucher  register,  II,  455-457 

Form,  II,  456 
Controlling  Accounts, 

Problems,  V,  9,  10,  11,  106,  119.  372 
Advantages  of,  I,  260-262;  II,  30;  III,  77 
Balances,  III,  108 
Checking  figures,  III,  96 
Closing,  illustrated,  III,  106-109 

Process  cost  system.  III,  106-109 
Depreciation  reserve,  IV,  184 

Form,  IV,  183 
Entries,  I,  265,  267;  III,  81-97 
Expense,  indirect  (See  "Expense  accounts") 
Finished  goods.  III,  79 

Entries,  III,  85 

Illustrated,  III,  86 

Journal  entry  illustrated.  III,  108 

Process  method.  III,  91 

Production-center  system,  illustrated.  III, 
325 
Finished  parts.  III,  86 
Function  of,  I,  259 
Ledger  made  self-balancing,  I,  243 
Manufacturing  enterprise,  II,  465 

Form,  U,  464 
Material,  III,  79,  81,  122 

Entries.  Ill,  81 

Estimated  cost  system,   illustrated.   III, 
359 

Illustrated,  111,  83 

Journal  entries,  illustrated.  III,  106 

Process  cost  system,  III,  86 

Textile  costs,  lU,  367,  368 
Opening,  I,  262-264 

Journal  entry,  I,  263 
Pay-roll, 

Illustrated,  III,  95 

Journal  entry,  illustrated,  III,  107 

Process  cost  system.  III,  88 


GENERAL  INDEX 


153 


Controlling  Accounts — Continued 
Pay-roll — Continued 

Production-center  system,  III,  323 

Textile  costs,  III,  400 
Plant,  IV,  181,  184 

Form,  IV,  182  ^ 

Posting,  I,  263,  264;  II,  200 

Labor-saving  devices,  I,  264 
Principle,  extension  of,  I,  270 
Process  cost  system.  III,  86-95,  345 
Production-center  system,  III,  310-327 

Chart,  III,  310 
Form,  III,  312,  313 

Illustrated  accounts,  III,  319-326 
Proving  balance,  I,  244 
Stores  (See  subheading  "Material,"  above) 
Subsidiary  ledger,  posting  to,  I,  265,  267 
Supplies,  III,  122 

Journal  entries,  illustrated.  III,  106 

Process  cost  system.  III,  88 
With  debtors  and  creditors,  II,  200 

Form,  II,  199 
Work  in  process.  III,  79,  83 

Entries,  III,  83 

Illustrated,  III.  85,  90 

Journal  entry  illustrated,  III,  107 

Process  method,  III,  90 

Textile  costs,  UI,  369-376.  380-389 
Conversion  Costs,  III,  88,  92 
Accounts,  III,  93 
Distributed  over  yarn  cost,  textile  mill.  III, 

376 
Statement,  III,  93 
Co-operation   Methods,  for  Combination 

OF  Corporations,  IV,  331 
Copper  Smelter,  III,  42 
Copyrights,  IV,  261 

Corporate   Control,   II,    18,    10    (See   also 
"Corporation") 

Form,  II,  19 
Corporation, 
Accounting, 

Books  and  records,  II,  20 

Features  of,  special,  I,  362 

Opening  entries,  I,  367,  370;  II,  «S3, 234 

Procedure,  I,  367-371 
Board  of  directors,  II,  18 
Bonds  (See  "Bonds") 
Committees,  II,  18,  19 


CoRPOBATiOK— CorUmtMi 

Consolidation  (See  aUo  *'CombiiutioM  aad 

Consolidations") 

Problems.  IV,  S67-S71;  V. »«.  f77.  tSl. 
281.  288.  293.  SOO.  804.  Sit.  Sl».  8« 

Causes  which  lead  to.  IV,  890 

Combination  by,  IV.  390 

Special  points.  IV.  971-975 

Working  capital  provided  by  subaidiarNs, 
IV.  871 
Defined.  I.  19.  ^i 
Dividends  (See  "Dividends") 
General  manager.  II.  18 
Holding  company.  IV.  939-992 

Advances  to  subsidiaries.  IV,  849,  979 

Balance    sheet.    IV,    940-95«    (See    also 
"Balance  sheet") 

Consolidated  income  tUtement,  IV,  96^ 
366 

Distinguished  from  combination  by  p«tr- 
chase.  IV.  339 

Formation  of.  IV,  999 

Income,  chief  source  of,  IV,  930 

Not  illegal  per  se.  IV.  994 

Profit  and  loss  statement,  IV,  940 

Purpose  of,  IV,  335 

"Restraining"  trade,  IV,  999 

Statements,  IV.  340 
Problem,  V.  300 

Statutes  permitting  formation,  IV.  999 

Working  capital  provided  by  sub«diarirs. 
IV.  371 
Investment  in  stock  of  other  corporations, 

IV,  334 
Law  governing,  II.  20 
Legal  requirements,  I.  962-9<V4 

Capital,  withdrawals  of,  I.  962,  9«9 

Profit  and  loss.  I.  364 
Notes,  IV,  121 

Short-term.  IV.  122 
Organization  and  management,  II.  18 

Form.  II.  19 
Organization  expenses. 
Problems.  V.  207.  804 

Capitalization.  IV.  17 

When  to  write  of!.  IV.  17 
Profits  (See  "Profits") 
Promoting  uncertain  bustneat  veolurf.    I, 

871-873 
Protection  of  creditors,  Iccal.  I.  9*t-ti4 
Scrip.  IV.  74.  75.  85 

Journal  entries,  illustrated.  IV.  M 


154 


GENERAL  INDEX 


CoBPOBATiON — Continued 
Stock  (See  "Stock,  capiul") 
Stockholders  (See  "Stockholders") 
Subsidiaries, 

Problems.  V,  221,  228,  231,  249,  293,  304 
Advances  to,  IV,  343,  373 
Dividends   declared   upon   acquisition   of 

stock  by  holding  company,  IV,  372 
Liabilities  and  deficit,  IV,  373 
Minority  interests  of,  IV,  372,  373 
Profits  of,  prior  to  consolidation,  IV,  359, 
360 
Problem,  V,  293 
Surplus,  as  premium,  IV,  858 
Surplus,  treatment  of,  IV,  361,  372 

Problems,  V,  304 
Surplus,  treatment  of,  when  stock  only 

partly  acquired,  IV,  363 
Working  capital  provided  by,  IV,  371 

Cost, 

Accounting  (See  "Cost  accounting,"  below) 
Conversion  (See  under  "Costs") 
Goods  sold,  I,  96 

Problems,  V,  127,  130 

Account,  III,  357-360 

Analysis  of,  I,  161 

Illustrative  statement,  IV,  308 

Information  necessary,  I,  161 

Method  of  ascertaining,  I,  90,  C7,  201-204 

Schedule  of,  I,  161 
Inventory  at,  II,  145 
Ledger  (See  "Ledger,  cost") 
Percentages  based  on,  compared  v.ith  selling 

price  basis,  II,  293 
Prime,  III,  16 
Production,  ratio  of  selling  expense  to,  II 

300,301 
Sheets  (See  "Cost  sheets,"  below)  I 
Summary,  III,  347 

Form,  m,  348 

Problem,  V,  347 
Total,  m,  16,  25 
Cost  Accounting,  (See  also  Vol.  II,  461-465) 
Bicycle  costs. 

Problem,  V,  380 
Breakfast-food  factory,  in,  42 
Brick  manufacture,  HI,  46,  50,  87 

Illustrated  system,  HI,  328-348 
Candy  factory.  III,  13 
Clothing  factory.  III.  43,  186 
Form,  m,  186 


Cost  Accounting — Continued 

Combined   job  order   and   process   system, 

III,  48  (See  also  "Textile  costs") 
Compound  products.  III,  54-69 
Copper  smelter,  III,  42 
Definition,  III,  3 
Distinct  from  commercial,  III,  4 
Efficiency,  standards  laid  down  by,  III,  5,  7 
Estimated  cost  system,  III,  63-65,  349-362 
Flouring  mill,  III,  43 
Foundries,  III,  50,  147,  261 

Form,  III,  51 
Functions  of,  III,  5-11 
Hat  factory.  III,  55 

Form,  III,  57 
Ice  factory,  III,  12 
Illustrated  systems,  III,  301-401 
Importance  of,  I,  11;  III,  3 
Inventories,  perpetual,  maintained  by,  II. 

5,9 
Job  order  system.  III,  13,  41,  47-52 

Job  cards,  II,  307,  309 

Production-center,  III,  98 

Production-center,    illustrated,    electrical 
goods,  III,  301-327 

Records,  III,  29 

Textile  costs,  illustrated.  III,  363-401 
Lumber  company. 

Problem,  V,  377 
Multiple  partw  products.  III,  66 
"Needle"  industries,  HI,  65 
Paper  mill,  HI,  43 
Patterns,  III,  52 
Perplexities  of.  III,  13 
Printing  plant,  HI,  33,  42,  182 

Form,  III,  32 

Problem,  V,  386 
Process  cost  system.  III,  12,  43-49,  86-95 

Brick  manufacturing,  III,  46,  50,  87 

Brick  manufacturing,  illustrated.  III,  328- 
348 

Textile  costs,  illustrated,  HI,  363 
Profits  of  different  lines  indicated  by,  HI, 

5,6 
Service,  unit  costs  of. 

Problem,  V,  367 
Shoe  factory.  Ill,  58,  63 

Form,  HI,  59,  60 
Shows  profit  and  loss,  IH,  4 
Silk-throwing  mill, 

Problems,  V,  351,  353,  355,  357 


GENERAL  INDEX 


155 


Cost  Accounting — Continued 
Simple  prod-ucts,  III,  41-53 
Stock  products,  III,  48 
Tradins:  enterprise    (See   "Cost  accounting 

for  trading  enterprise,"  below) 
Textile  costs  (See  "Textile  costs") 
Twine  factory.  III,  42 
Uniform  system,  III,  12 
When  necessary.  III,  11 
Woven  fabric,  costs  of. 

Problem,  V,  347 
Yarn  spinning.  III,  46,  47  (See  also  "Textile 

costs") 
Cost  Accounting  for  Trading  Enterprise, 

II,  466-477;  III,  25,  74 
Cost  of  sales  schedule,  II,  475 
Direct  charges,  II,  466 
Inventory,  opening,  II,  471 
Overhead,  distribution  of,  II,  467-470 

Accounting  department,  II,  468 

Advertising,  II,  468 

Dehvery  expense,  II,  468 

Departmentalization  method,  II,  467 

Depreciation,  II,  475 

Educational  department,  II,  469 

Elevator,  II,  469 

Employment  bureau,  II,  470 

Fixed  charges,  II,  475 

Floor  space,  basis  of,  II,  467 

General  expense,  II,  470 

Heat,  II,  473,  474 

Insurance  on  furniture  and  fixtures,  II,  475 

Insurance  on  stock,  II,  470 

Liability  insurance,  II,  470 

Light,  II,  473,  474 

Power,  II,  473,  474 

Rental  expense,  II,  471 

Service,  special,  expense,  II,  469 

Supplies  department,  II,  469 

Telephone,  II,  468 

Window  dressing,  II,  469 
Pay-roll  analysis,  II,  475 
Profit  on  sales,  analysis  of,  II,  476-477 

Form,  II,  476 
Purchases,  analysis,  II,  475 
Sales,  net,  II,  475 
Cost  Accounts  (See  also  "Accounts") 

Relation  between  general  ledger  and,  III,  73 
Cost  Distribution,  Manufacturing,  Proc- 
ess System,  HI,  92 
Cost-finding  (See  "Cost  accounting") 


Cost   Ledobb    (See   'Xedgw.   eoet**   -Coet 

sheets") 

Cost  or  Goods  Sold  Accotnrr,  III.  M7 

Illustrated.  III.  SM.  900 
Cost  of  SALia,  II,  144 

Distribution  of,  U,  475 
Cost  Period,  Short,  III.  |0.  W 

Coinciding  with  pay-ron  period.  III.  tS 
Cost  Records,  III.  29  (See  dso  "Records") 
Cost  Sheets,  III,  30,  88,  55.  76  (See  dUo 
"Ledger,  cost") 
Forms,  III,  39.  57 
Contract.  II,  454 
Form,  II.  455 
Material  recorded  on.  III.  131 

Proof  of,  III,  132 
Production-center  system.  HI,  808 

Form.  Ill,  309 
Record  of  stores  issued.  Ill,  138 
Requisitions  posted  to.  III.  300 
Cost  Summary, 

Process  cost  system,  HI,  847 
Form,  III,  348 
Problem,  V,  347 
Costs  (See  also  "Cost  accounting") 

Comparison  of,  at  various  periods.  HI.  66 
Conversion.  III.  88.  92 
Accounts,  III,  93 
Distributed  over  yam  cost,  textile  wUH, 

III.  376 
Statement  of.  III.  93 
Departmentalization  of  all.  process  cost  ^jr»> 

tern.  Ill,  95 
Estimated  (See  "Estimated  cost  ^jrsteoB") 
Estimated  material.  III.  OS 
Labor  (See  also  "Labor") 
Direct,  III.  18 
Indirect,  III.  18 
Making  and  selling,  chart.  HI.  25 
Material  (See  also  "Material") 
Direct.  lU,  17 

Indirect.  Ill,  17  (See  also  •^upplks") 
Prices  fixed  by.  Ill,  5.  6 
Cotton  Mill,  111.  43,  91 
Spinning,   lU,   40.   47   (See  also   Textile 
costs") 
Production  report,  weekly.  III.  44, 45 
Form.  111.  45 
Coupon  Books.  11.  187 
Coupon  Productiom  Okobs.  III.  58 
Form,  UI.  59.  00 


156 


GENERAL  INDEX 


Credit, 

Department,  sales  orders,  approving,  II,  157 
Memorandum,  II,  127,  128 

Form,  II,  128 
Requisition,  II,  141,  142  ' 
Sales  on,  II,  163 
Creditobs, 

Accounts,  nuul-order  business,  II,  392 
Status  of,  in  liquidation  proceedings,  I,  146 
Credits, 

Deferred  (See  "Deferred  credits") 
Defined,  I,  17,  41,  176 
Cross-indexing,  II,  27 
Cdmulation  of  Statistics,  II,  294|  295 
Current, 
Assets,  I,  65 
Liabilities,  I,  66 
Customers', 
Accounts, 

Arrangement  of,  II,  268 
Loose-leaf  ledger,  II,  340 
Order  register,  II,  340,  341 
Form,  11,  339 
Bill,  II,  338 
Form,  II,  339 
Cut  Sheet  Journal,  II,  245 
Form,  II,  244 

D 

Dat-Book,  I,  378-381;  II,  26,  27 
Form,  I,  379 
Accepted  as  evidence  in  courts,  II,  27 
Development  of,  II,  27 
Entries,  I,  380 

Transactions  included  in,  I,  380 
Posting  to  ledger,  methods  of,  I,  381,  382 

Form,  I,  382 
Requirements  for,  I,  378 
Ruling  and  form,  I,  379 
Day-Rate  Method  of  Wage  Payment,  III, 
169 
Disadvantages  of,  195-197 
Debit  Memorandum,  II,  127 

Form,  n,  127 
Debits, 

Deferred  (See  "Deferred  debits") 
Defined,  I,  17,  41,  176 
Debts, 

Amortization  of,  compared  with  sinking  fund 

method  of  payment,  IV,  153,  154 
Bad, 

Account,  analysis  of,  I,  41?  , 

Accounting  for,  IV,  219 


Debts — Continued 
Bad — Continued 
Balance  sheet,  treatment  on,  I,  326,  327 

Problem.  V,  202 
Computation  of  probable  loss  from,  IV, 

217 
Income  tax  requirements,  IV,  220 
Provision  for,  I,  326.  327 

Problem,  V,  19 
Relation  between  losses  and  sales,  IV,  216 
Reserve  account,  analysis  of,  I,  420 
Reserve  for,  I,  326,  327;  IV,  105,  115,  216 

Problems,  V,  19,  21,  228 
Valuation  of  accounts  receivable,  IV,  218 
Estate,  accounting  for,  II,  407 
Priority  of,  in  bankruptcy  proceedings,  IV,. 
323 
Decimal  System  op  Numbering  Accounts,. 

II,  271 
Decimal  System  of  Stores  Classification,. 

m,  156 
Defective  Work,  III,  146 
Deferred, 

Credits,  III,  98,  101,  217;  IV,  26-32 

Problems,  V,  106.  108,  119, 152,  215,  2.53 
Discount  on  bonds,  IV,  137,  141 
Expenses  accrued,  IV,  27 
Income,  deferred,  I,  66;  IV,  30-32 
Liabilities  accrued,  IV,  26 
Taxes  accrued,  IV,  29 
Debits,  I,  63,  65,  98.  113,  119;  III,  98,  lOI, 
217;  IV,  12-25 
Problems,  V,  125,  132,  137,  152.  180, 
202,  215,  277,  304 
Accounts,  cash  methods  of  handling,  IV, 

19 
Accrued  interest  vs.  interest  accrued,  IV, 

13 
Adjusting  entries,  IV,  15-17 
Advertising,  IV,  18 
Dividends  receivable,  IV,  24 
Income  accrued,  IV,  19-24  (See  also  "In- 
come, accrued") 
Insurance.  IV,  14-17 
Interest  (See  "Interest") 
Organization  expenses,  IV,  17 
Prepaid  expenses,  IV,  12-19  (See  also  sub- 
heading "Charges,"  above) 
Profits  as  affected  by  manner  of  treat- 
ment, IV,  14 
Royalties,  IV,  18 
Expense  (See  subheading  "Charges,"  above) 


GENERAL  INDEX 


137 


Deferred — Continued 

Liabilities      (See      subheading      "Credits," 
above) 
Deficiency  Account,  1, 140, 141;  IV,  319,  826 
Problems,  V,  61,  66,  70 
Illustrative  statements,  I,  140;  IV,  329 
Deficit, 

Ascertaining,  method  of,  I,  46 
Defined,  I,  33,  34 

Showing  of,  on  balance  sheet,  1, 119;  IV,  284 
Problems,  V,  271,  304 
Departments, 

Accounting,  II,  12,  468 
Administrative    (See    "Administrative    ex- 
pense") 
Advertising,  II,  154 
Credit,  II,  157 
Distribution  of  indirect  expense  over  (See 

"Expense") 
Educational,  expense,  distribution  of,  II,  469 
Financial,  II,  12 

Non-productive,    III,    102,    268    (See    also 

"Administrative    expense,"    "Building 

expense,"      "Power     plant     expense," 

"Stores  department  expense") 

Distribution  of  indirect  expense.  III,  99, 

103,  107,  257-270 
Sub-departments,  III,  265-268 
Office  (See  "Administrative  expense") 
Power  plant  (See  "Power  plant  expense") 
Process    cost    system    (See    "Process    cost 

system") 
Productive, 

Expense,  indirect.  III,  212 

Expense,    indirect,    account    illustrated, 

III,  104 
Expense,  indirect,  distribution  over.  III, 

99,  103,  104 
Functions  of,  II,  10 
Purchasing  (See  "Purchasing  department") 
Sales  (See  "Sales  department") 
Service  (See  subheading  "Non-productive," 

above) 
Shipping, 

Account,  illustrated,  textile  costs.  III,  393 
Chart,  graphic.  III,  417 

Form,  III,  418 
Checking  goods  in,  II,  160 
Expense,  III,  393 
Tickets.  II,  159,  160 
Stores  (See  "Stores") 


Dzp  x&Tussm—ConHnMti 

Sub-, 

Non-productive,  II,  10,  It;  HI. 

Productive   (machine  groups).  III.  fit, 
287.    301     (See    alio    **M«rliine    mU 
method   of   distributing  expca«  evar 
product") 
Supplies,  expense,  distribution  ol,  II,  4M 
Traffic.  II.  154.  155 
Departmental  CLAaAtncATioii  or  Svosn. 

Process  system.  Ill,  ISl 
Departmentalization    or    Aooomm,    III, 

5.  7.  22 
Departmentalizatiom  or  Exrzsnz,  II.  467 
Departure  Recoro,  Hotel.  Gcann,  11.  4iS 
Deposits, 

Charged  back,  I,  22« 
Interest  on,  I,  220 
Depreciation,  I,  815-8«7;  11.  475;  HI.  M. 

100,  244-252;  IV.  185-188  (See  nlw  gracr- 

ally  "Fixed  charges") 
Accounting  covering,  I,  817-819;  III.  ttS; 

IV,  179-188 
Actual  and  estimated  vary,  IV,  99.  100 
Adjusting  entries,  IV,  185-188 

Problems,  V,  15,  18,  18.  19.  «1,  215 
Appraisal  method,  IV.  168 

Disadvantages  of,  IV,  168 
Assets  subject  to,  I,  315 
Auxiliary  equipment.  III.  248 
Buildings, 

Account,  analysis  of,  I,  41f 

Reserve  account,  analysis  of.  I.  419 
Causes  of,  I,  315,  318 

Obsolescence,  I,  315.  818 

Time,  lapse  of,  I.  815 

Wear  and  tear.  I.  815 
Charge  for,  wrongly  shown.  IV.  108 
Defined.  I,  315 
Distribution  of  charge  in  trading  < 

II.  475 
Effect  on  profits,  IV,  49 
Problem.  V,  182 

Legal  recognition,  IV,  8S 
Effect  on  valuation.  IV.  49 
Fire  loss  adjustment,  IV,  il74 
Fluctuations,  I.  828 
Franchises.  IV.  263.  284 
Good-will.  IV.  255 
Journal  entry.  I.  818;  HI.  107 
Kinds  of.  I.  316.  817 
Leaseholds,  IV.  167 


158 


GENERAL   INDEX 


Depbecxation — Continued 

Machinery  and  equipment.  III,  290;  IV,  237 
Manufacturing  business,  IV,  40 
Obsolescence,  III,  245 
Original  cost  values,   in  arriving   at   gross 

profits,  IV,  35 
Patents,  IV.  258 

Physical  and  functional,  I,  316,  317 
Principles  and  policies,  IV,  165 
Prior  periods,  accounting  covering,  IV,  98,  99 

Problem.  V,  180 
Production-center  ^system.  III,  290 
Purpose  of,  IV,  50 

Rates,  determination  of,  1, 321-325;  III,  247; 
IV,  169- 178 
Composite  rate,  IV,  169,  177 

Problem.  V,  168 
Fixed    percentage    of    diminishing    value 
method,  I,  322-324;  IV,  173,  174 
Problem,  V,  168 
Fixed  proportion  methods,  IV,  170-172 

Problems,  V,  16,  18,  168 
Service  method,  IV,  172 
Sinking-fund   method,   I.   324.   325;    IV, 

175-177 
Straight-line  method,  I,  322;  IV,  171 

Problem.  V,  168 
Working  hours  method,  IV,  172 
Repairs  and  renewals  not  compensation  for, 
IV,  167 
Exception,  IV,  167 
Reserve    for     (See    "Reserves,"    "Sinking 

fund") 
Schedule,  III,  224,  234,  249,  253 
Form,  III,  250,  251 
Sub-departments,  III,  266 
Textile  costs.  III,  397,  398 
Stock-in-trade,  IV,  223 
Reserve  for,  IV,  115 
Values,  estimation  of,  IV,  168 

Precautions,  IV,  168,  169 
Wasting  of  assets  distinguished  from,  IV,  239 
Designing  Forms,  II,  56,  57 
Dewey  Decimal  System  of  Classification, 

III,  156 
Diagrams,  Value  of,  II,  295 
Diamond  Register,  II,  342 

Forms,  II,  343 
Dickinson,  A.  Lowes,  Quoted, 
Maintenance  expenditures,  IV.  47 
Profit  and  loss  sUtement,  IV,  298,  299 


Dickinson,  A.  Lowes,  QvoTED^Continued 
Profits  of  subsidiaries  prior  to  consolidation, 

IV,  360 
Reserves,  secret,  arguments  for  and  against, 
IV,  113 
Difference  Charts,  III,  406-409 

Forms,  III,  408,  416 
Differential  Piece-Rate  Method  of  Wage 

Payment,  II,  305;  III,  200 
Direct  Expense,  III,  18 
Direct  Labor,  III,   18   (See  also  "Labor," 
"Pay-roll") 
Chart,  graphic.  III.  407HH7 
Forms.  Ill,  408,  413,  416,  418 
Directorates,  Interlocking,  IV,  332 
Directors,  Corporation,  II,  18 
Disbursements,  Cash  (See  "Cash  disburse- 
ments") 
Discounts, 
Account,  analysis  of,  I,  421 
Bank,  I,  299 
Bonds  (See  "Bonds") 
Cash,  I,  99,  275;  II,  98;  IV,  35,  244 

Problems,  V,  11,  13,  23,  61,  70,  233,  345 
Abolishing,  desirability  of,  I,  282 
Account,  analysis  of,  I,  412 
Accounting  treatment  of,  I,  277-280;  IV, 

244 
Bonus  instead  of,  I,  282,  283 
Calculating,  basis  for,  I,  276 
Cash  book  column  for,  I,  279,  280 
Cash  book  entry,  I,  217 
Disadvantages  of,  I,  283 
JournaUzing,  I,  277,  278 

Problem,  V,  23 
Nature  and  elements  of,  I,  275 
Not  deducted  in  ascertaining  gross  profit, 

IV,  35 
Not  deducted  in  calculating  bonus  on  total 

purchases,  I,  277 
Provision  for,  in  closing  entry,  I,  281 
Received,  account,  analysis  of,  I,  423 
Recording,  I,  278,  279;  II,  197-200 

Form,  II,  199 
"Terms,"  I,  233 
Columns  in  cash  book,  I,  215-217 
Compound,  IV,  149,  153 

Rule  for  finding,  IV,  153 
Defined,  I,  271 
Notes  receivable,  I,  299 

Problems,  V,  13,  61,  70 
Accoimting  covering,  I,  300 


& 


GENERAL  INDEX 


150 


Discounts — Contin  ued 
Paid  in  advance,  IV,  14 
Trade,  I,  100,  271-275 

Calculating,  quick  methods,  I,  272-274 

Deducted    in    ascertaining    gross    profit, 
IV,  35 

Stating,  methods  of,  I,  272 
Dish  Breakage,  Hotels  and  Restaurants, 

II,  442 
Dissolution,  Partnership,  I,  352-361   (See 

also  "Partnership,  dissolution") 
Distribution  of  Costs  Direct  to  Product, 

Process  Cost  System,  III,  44,  92 
Distribution  of  Expense  (See  "Expense") 
Distribution  Sheet,  Cash,  II,  226,  227 

Form,  II,  227 
Dividends, 
Account,  analysis  of,  I,  421 
Accounting  for,  IV,  77-94 

Problems,  V,  137,  209,  215 
Applied  to  stock  subscriptions,  entries  for 

IV,  87-89 
As  liability  on  consolidation. 

Problem,  V,  312 
Bond,  IV,  7> 

Entries  for,  IV,  92 
Cash,  IV,  72 

Entries  for,  IV,  82,  83 
Cumulative,  IV,  89 
Problem,  V,  233 

Entries  for,  IV,  89-91 
Declaration  of,  IV,  62-64 

Closing  transfer  books,  IV,  63,  64 

Forcing,  IV,  64 
Declared,  status  of,  IV,  66 
Definition,  IV,  55 
Dividend  sheet  or  book,  IV,  79 

Forms,  IV,  80,  81 
Expenditures,  revenue  and  capital,  IV,  61 
Illegal.  IV,  93 

Accounting  for,  IV,  93 
Interim,  IV,  87 

Entries  for,  IV,  86,  87 
List,  IV,  79 

Form,  IV,  80 
New  York  law,  IV,  56 
Notice  of,  IV,  69 
Participation  in,  IV,  65 
Payment,  IV,  70-73,  77-79 

Form  of,  IV,  72 

Out  of  capital,  IV,  93 

Procedure  for,  IV,  77     I 


DiVIDENM— Cofth'niMd 
Pay  ment— C'on/in  lud 
To  whom  paid,  IV.  i 
With  borrowed  money.  IV,  M 
Profit*  avaiUble  for.  IV,  58 
Property,  IV.  75 

Accounting  for,  IV,  M 
Receivable,  IV,  U 
Scrip.  IV,  74 

Entries  for,  IV,  85 
Sources  of,  IV,  56-58 
Special,  IV,  86 

Entries  for.  IV,  86.  87 
Status  of  declared.  IV,  68 
Stock,  I.  Ill;  IV,  73 
Problem,  V.  284 
Entries  for,  IV,  91 
Prohibited  in  Massachusetts,  IV,  7S 
Subsidiary  companies,  elimiiuitioo  oo  cos* 

solidated  balance  sheet,  IV.  96S 
"Wasting"  enterprises,  IV,  57 
English  decision.  IV.  58 
Double-Entrt   BooKKEEPC«a   (See  **Book 

keeping,  double-entry") 
Dbaftinq  Expense  Accoukt,  IixcmraAniw 

III,  326 
Drafts, 

Acceptance  of,  I,  304.  805 
Accounting  covering,  I,  805 
Collected  by  bank.  I,  221 
Drawings  (Sec  "Withdrawals") 
Driver's, 
Book,  II,  336,  338 

Form,  II,  338 
Sales,  II,  336,  838,  840 
Customer's  bill.  II,  388 

Form,  II,  339 
Tickets,  accounting  (or,  II,  840 
Due  Bill  Reoister,  II,  309,  870 
Dues,  Cldb.  II,  449 


Economics.  Dbmneo.  I.  80 
Economist,  I.  80 

Educational    DEFA»r»iE!«rr   Lxnmm,   Dis- 
tribution or,  II,  469 
Efficiency,  ^   ^ 

Increased  by  modern  accottnlinf  ■MlWHii. 

^•* 
Records,  application  to  wrwcOoo  of  tnvn^ 

IV.  430 


160 


GENERAL   INDEX 


E  FFiciEXC  Y — Con  tin  ued 

Standard  of,  laid  down  by  cost  accounting, 
III,  5,  7 
Electrical  Goods  Factory, 

Illustrative  production-center  system.   III, 
301-327 
Electricity  Expense,  III,  233,  233  (See  also 
generally    "Fixed   charges,"    "Light   and 
heat") 
Elevator  Expense,  Distribc^tion  of,  II,  469 
Emerson  System,  Wage  Payment,  II,  306 
Employer's  Liability  Insurance,  III,  238 
Employment  Bureau   Expense,   Distribu 

TioN  of,  II,  470 
Engineering  Plant, 

Expense  distribution,  III,  260 
Engineering      Trade,      Anticipation      of 

Profits,  IV,  36 
Entries, 

Adjusting,    I,    79-83;    IV,    4-6    (See    also 
"Adjustments") 
Check-marking  corrections,  IV,  434-436 
Deferred  charges,  IV,  15-17 
Gross  profit,  determination  of,  I,  85 
Merchandise  accounts,  I,  81 
Mixed  account,  example  and  treatment  of, 

I,  80-83 
Sinking  fund,  IV,  160 
Surplus  (See  "Surplus") 
Cash  book,  II,  195,  196 

Closing,  I,  83-85,  91,  92,  100,  101;  II,  234; 
III,  106-110;  IV,  6,  7,  12 
Controlling  accounts,  process  cost  system, 

m,  106-109 
Example  of,  I,  84-86 
Preparation  of,  I,  91 

Proprietors'  drawing  accounts,  I,  100,  101 
Provision  for  discounts,  I,  281 
Work  in  process  account,  process  method, 

m,  90 

Current,  I,  265 
Journal  (See  "Journal") 
Offsetting,  I,  64 
Opening,  I,  180;  II,  233,  234 
Form,  I,  181 
ControlUng  accounts,  I,  263 
Corporation,   I,   367,  368,   370,  371;  II, 
233,  234 
Form,  I,  367,  368 
Partnership,  I,  339-343;  II.  233 
Form,  I,  339,  840 


Entries — Continued 
Original, 

Fraudulent,  avoiding,  II,  30,  31 

Grouping  into  accounts,  I,  39 
Unusual,  I,  267 
Equipment,  HI,  213,  217,  222 
Accounting  for,  IV,  237 
Depreciation,  III,  244-252;  IV,  237 
Errors, 

As  to  profits,  IV,  93 

Problem,  V,  59 
Classification,  IV,  383-335 
Compensating,  I,  73 
Corporation,  IV,  389 
.Correction  of,  IV,  430-442 

Check-marking,  IV,  434-436 

Fundamental  principle,  IV,  431 

Necessity^for,  IV,  387 

Organization  and  efficiency  records,  IV, 
430 

Rules  of  procedure,  IV,  432   ' 

Rules  of  procedure,   illustration  of,   IV, 
436-441 

Three  steps  in  making,  IV,  433 
Detection  oi,  by  bookkeeping  department, 
1,73,  2r,  262;  IV,  408-416 
Problem,  V,  343 

Analysis  of  the  ledger,  IV,  409-413 

Articulation  statement,  IV,  413 

Importance  of,  IV,  403 

Kinds  of  mistakes  to  be  expected,  IV,  403 

Tests,  IV,  414 

Trial  balance  differences,  IV,  404-409 
Problem,  V,  137 
Detection  of,  by  executives,  IV,  390-402 
Problem,  V,  336 

Casual  scrutiny,  IV,  401 

Expenses,  percentage  of,  IV,  398 

Graphic  statements,  IV,  399-401 
Form,  IV,  400 

Gross  profit,  percentage  of,  IV,  392-394 

Inventory  test,  example  of,  IV,  395 

Percentage  methods,  IV,  391-399 

Turnover,  percentage  of,  IV,  395-397 
Examples  of,  IV,  385-387 
Formal,  IV,  384 
Intentional,  IV,  383-386,  388 
Ledger,  analysis  of,  illustrated,  IV,  409-41§ 
Of  principle,  IV,  383-388 
Of  tecnnique,  IV,  384-387' 
Partnership,  IV,  388 


^!^ 


GENERAL  INDEX 


161 


Errors — Continued 

Prevention  of,  IV,  380-382 
Internal  check,  IV,  381 
Mechanical  devices,  IV,  380-381 
Proprietorship,  sole,  IV,  388-389 
Statistical,  IV,  383-386,  388 
Substantial,  IV,  384 
Trial  balance  differences,  IV,  404 
Problem,  V,  137 
Rules  for  locating,  IV,  405-409 
Unintentional,  IV,  382-386,  388 
Estate  Accounting,  II,  404-414 
Form,  II,  411-413 
Administrator,  II,  404 
Assets,  II,  405-407 
Authority  to  act,  II,  404,  405 
Debts  and  expenses,  II,  407 
Executor,  II,  404 
Final  accounting,  II,  410 

Duties  subsequent  to,  II,  410,  414 
Income,  II,  408 
Principal,  II,  408 
Records,  II,  402,  409,  410 
Trustee,  II,  404 
Estimated  Cost  System,  III,  63-65,  343-332 
Accounts  illustrated.  III,  353,  360 
Adjustment  between  actual  and  estimated 

costs.  III,  359 
Basic  principles.  III,  352 
Closing  inventory.  III,  356 
Computing  estimates.  III,  353 
Conditions  necessary  for.  III,  350,  351 
Cost  of  goods  sold  account.  III,  357 

Illustrated,  III,  360 
Factory  ledger.  III,  358 
Opening  inventory.  III,  354 
Estimated  Material.  Costs,  III,  63,  1 19 
Estimated     Supplies     on     Job,     Unusual. 

Method,  III,  222 
Estimation  of  Asset  Values,  IV,  7,  41-45, 

168 
European  Pian,  Hotel,  II,  482 
Exchange, 
Bills  of,  I,  295 
Charges,  I,  218 
Executive, 

Detection  of  errors  by,  IV,  390-402 

Problem,  V,  336 
Functions,  IV,  390,  391 
Importance  of  a  budget  to,  II,  317,  318 
Organization  by,  IV,  390,  391 
Supervision,  IV,  390,  391 


ExBcuTOB.  n,  404  (S««  «bo  "EaUU  i 

ing") 

Exhibits,  Scbeduudi  aicd  SrATSMcsrrm.  II. 

288.  289 
Expemditdres, 

Capiul  (Sec  "Capita]  expeoditorr*") 
Revenue,  dwtinction  between.  aii4  rapitU. 
I,  107;  IV,  45-49,  97.  2S5-«37 
Problem,  V,  132 
Expense, 
"Account," 

Estimated  co«t  ayitem.  III.  MO 
Accounts,  I,  68,  69,  «Sfl;  111,  9S-105.  f  I  ?. 
217,  221,  223,  234-242.  288.  SIO 
"Catch-all,"  inadvisabtlity  of,  I,  161 
Chart,  III,  212,  810, 

Forms,  III,  19.  21,  214-216,  812,  SIS 
Illustrated.  Ill,  101-104 
Journal  entries.  III,  106-108 
Opening.  III.  98 

Posting  to  profit  and  lorn  acrouat.  1. 5t 
Process  cost  system.  Ill,  89, 106-loa.  fOJ, 

271.  844 
Production-center  system,  illustrated.  III. 

819-828 
Purchase  journal.  I.  286 
Reserve  account.  III.  28S 
Selling  expenses,  I,  97.  98 
Textile  costs.  Ill,  867,  S0»-9M  (Sm  a!a» 
under  "Textile  costs") 
Accrued,  III,  98.  100;  IV.  27 

Problem,  V.  123 
Adjustment  between  actual  and  appfied.  III. 
212,  282-285,  295 
Flat  percentage  charge,  m.  284 
Production-center  system.  III.  205 
Reserve  account.  III.  28S 
Administrative.  I.  69;  II.  298;  III.  18.  M. 
102.  168.  172.  187.  218.  220.  221  (Sm  ako 
generally  subheading  **Labor,  iaAmU" 
below) 

Problem.  V.  841 
On  distribution  sheet.  III.  224. 259. 220 
Process  cost  system.  III.  160.  544 

Form.  III.  844 
Production-center  system.  Ill,  291,  »* I 
Standing  expense  orders.  111.  226 
Sub-departmenU.  111.  265 
Textile  costs.  III.  306,  397 
Advertising.  II.  468;  III.  217,  220 
Analysis,  extent  of.  III.  211 
And  expenditure,  disllbctioa  betww*.  I.  IVf 


16? 


GENERAL  INDEX 


Expense — Continued 

Applied  (See  subheading  "Rates  of  distribu- 
tion, predetermined,"  below) 
Building,  III,  236,  237 

Production-center  system.  III,  289,  319 
Textile  costs.  III,  395 
Capital,  IV,   296,   297   (See  also   "Capital 

expenditures") 
Capitalizing,  danger  of,  IV,  46 
Chart,  III,  212,  310 

Forms,  III,  19,  21,  214-216,  312,  313    , 
Graphic,  III,  407-415 

Forms,  III,  408,  413,  416,  418 
Classification  of,  I,  99,  162;  III,  18,  21,  213 
Classification  of  invoices.  III,  217 
Subsidiary  ledger.  III,  218 
Form,  III,  219 
Columns  in  purchase  journal,  II,  110-115 

Forms  II,  111,  113 
Comparison  of,  graphic  chart,  IV,  401 

Form,  IV,  400 
Deferred,  I,  65,  98,  113,  119;  III,  98,  101, 

217;  IV,  12-19 
Delivery,  II,  468 

Depreciation,  II,  475;  III,  98,  100,  244-252 
(See  also  generally  subheading  "Fixed 
charges,"  below) 
Account,  III,  223 
Auxiliary  equipment,  HI,  246 
Journal  entry,  illustrated.  III,  107 
Machinery,  III,  290 
Obsolescence,  III,  245 
Production-center  system.  III,  290 
Rates,  III,  247 
Schedule,  III,  224,  234,  249,  253 

Form,  III,  250,  251 
Schedule,  textile  costs.  III,  397,  398 
Sub-departments,  III,  266 
Direct,  II,  466;  III,  18 
Distribution,  II,  463,  467-477;  III,  36,  98, 
212,  213,  225,  253-286 
Chart,  III,  212 

Form,  III,  214-216 
Non-productive  departments  exx)ense.  III, 

257-270 
Procedure  outlined.  III,  98,  212 
Process  cost  system.  III,  89,  271 

Direct  to  product.  III,  44,  92 
Sources  for  charges.  III,  224,  253 
Distribution  over  departments,  II,  467-477 
III,  99,  103,  104 
Problem,  V,  Sm 


Expense — Continued 

Distribution  over  departments — Continued 

Sub-departments,  III,  265-268 
Distribution  over  product.  III,  98,  213,  225, 
271-286 
Problems,  V,  351,  353,  355 
Adjustment  between  actual  and  applied 
expense.  III,  212,  282-285 
Flat  percentage  charge.  III,  284 
Reserve  account.  III,  283 
Machine-rate  method.  III,  272,  277-279, 
287-298,  301-327  (See  also  "Machine- 
rate  method") 
Material  cost  method.  III,  272,  281 
Percentage  of  labor  method.  III,  272-275 
Prime  cost  method.  III,  272,  281 
Productive-hour  method.  III,  272,  275- 

277 
Rates,  predetermined.  III,  42,  212,  271- 

285 
Sold-hour  method.  III,  272,  279 
Distribution  sheet.  III,  29,  36,  38,  253-270 
Forms,  III,  37,  254,  255,  258,  259,  262, 
263 
Administrative  expense,  III,  260 
Depreciation  (See  subheading  "Deprecia- 
tion schedule,"  above) 
Fixed    charges    (See    subheading    **Fixed 

charges  schedule,"  below) 
Power  plant.  III,  260 
Standing  orders  and  supplies  requisitions 

distributed  on,  III,  224 
Statement  of  expenses,  production-center 
system.  III,  308 
Form,  III,  307 
Stores  department  expense.  III,  260,  264 
Stores  department  expense  applied  direct 

to  material.  III,  268 
Sub-departments,  III,  265-268 
Educational  department,  II,  469 
Electricity,  III,  233,  239  (See  also  subhead- 
ings "Fixed  charges,"  "Light  and  heat," 
below) 
Elevator,  II,  469 
Employment  bureau,  II,  470 
Equipment,  III,  213,  217,  222 
Estate  accounting  for,  II,  407 
Estimate  of,  departmental,  II,  321,  322 
Estimated  cost  system  (See  "Estimated  cost 

system") 
Fixed  charges,  II,  475;  lit,  213,  217.  233- 
243  (See  also  "Fixed  charges") 


GENERAL  INDEX 


108 


Expense  — Continued 

Fixed  charges — Continued 

"Account"  illustrated,  production-center 

system,  III,  320 
Schedule,  III,  224,  233,  253 

Form,  III,  235 
Schedule,  process  system.  III,  341 

Form,  III,  342 
Schedule,  sub-departments.  III,  266 
Floor  space,  II,  467 

Gas,  III,  213,  233,  239  (See  also  generally 
subheadings  "Fixed  charges,"  "Light  and 
heat") 
General,  II,  470 

Schedule  of,  I,  162 
"General  expense  account," 

Textile  costs.  III,  396 
Indirect,  III,  18,  83 

Insurance,  II,  470;  475;  III,  98,  100,^213, 
217,  233,  238  (See  also  generally  sub- 
heading "Fixed  charges,"  above) 
Account  illustrated,  III,  102 
Furniture  and  fixtures.  III,  475 
Journal  entry  illustrated.  III,  107 
liability,  II,  470 

Production-center  system,  III,  290 
Stock,  II,  470 
Textile  costs.  III,  399 
Interest   on   investment.   III,  240  (See  also 
generally    subheading    "Fixed    charges," 
above) 
Journal  entries  illustrated.  III,  106-108 
Labor,    indirect.    III,    166,    168,    213,    220, 
226-232 
Accounts,  III,  221 

Administrative  (See  subheading  "Admin- 
istrative," above) 
Chart,  graphic,  III,  191 

Form,  III,  193 
Classification,  III,  221 
Inspection,  III,  226 
Repairs  to  machinery.  III,  221,  226 
Standing  expense  orders.  III,  224,  226-232 
Ledger,  subsidiary,  III,  218,  266,  267 
Form,  III,  219 
Estimated  cost  system.  III,  358 
Process  cost  system.  III,  343 
Form,  III,  344 
Light  and  heat,  II.  473,  474;  III,  226,  304 
(See    also    subheadings    "Electricity," 
"Gas,"  above) 


ExPENSB — Continued 
Light  and  beat— Con/tntM^ 

Account     illustrated,     p^xliniina  tmmUt 

system.  Ill,  S20 
Account  illustrated,  textile  cxmU.  III.  tH 
Machine-rate   method  of  distributiiMi  C8w 

"Machine-rate  method") 
Machinery,    III.   21S.   217,   2«f   (Sm  ahs 
"Machine-rate  method") 
Depreciation,  III.  244-252,  290 
Expense  account.  III,  2M,  SfS 
Insurance,  III,  290 
Power  expense,  distribution.  III,  tit 
Taxes,  III.  290 
Manufacturing  enterprise.  II,  46S 
Miscellaneous,  accounts,  analysis  ol,  I,  414 
Non-productive  departments  (See  **A(lam»- 
istrative  expense."  "Building  i 
"Power    plant   expense," 
partment  expense") 
Accounts.  III.  102.  268 
Chart.  III.  212 

Form.  III.  216 
Distribution  of  expense,  m,  M.  103,  101. 

257-270 
Sub-departments,  III,  265-268 
Office.  (See   subheading   "Administrative.'* 
above) 
Account,  textile  costs.  III,  S97 
Organization,  IV.  14,  17 
Problems.  V.  207.  304 
Account,  analysis  of,  I,  406 
"Overhead"  account,  illustrated.  HI.  I<H 
Plant  assets.  Ill,  213.  217,  ftt 
Plant  ledger.  III.  220 
Power.  II,  473,  474;  III,  S»i 
Power  plant.  III.  98.  99,  10« 
Account.  III.  217 
Account,  illustrated.  III.  lOS 
Journal  entr> ,  illustrated.  Ill,  107 
On  distribution  shret.  III.  260 
Process  cost  system.  III.  3*4 
Production-center  system.  III.  289, 290,319 
Prepaid.  I,  63.  98,  113,  119;  III.  98.  161. 
217;  IV.  12-19 
Problem.  V,  180 
Production-center  system   (See  **llArfci«e- 

rate  method") 
Productive  departments.  III.  105-I8i,  tU 
Account  illustrated.  111.  101 
Chart.  III.  212 
Form,  HI.  214.  215 


164 


GENERAL   INDEX 


Expense — Continued 
Productive  departments— CoreitnutJcZ 

Distribution  of  expense  over.  III,  99,  103, 
104    (See    also    subheading    "Distribu- 
tion," above) 
Journal  entry,  illustrated,  III,  107 
Purchase  journal.  III,  213,  217,  224,  253 
Purchasing  department,  II,  297,  298 
Rates  of   distribution,   predetermined.   III, 

42,  212,  271-285 
Recording,  I,  63 

Records,  III,  224  (See  also  individual  sub- 
headings) 
Rent,  II,  471;  III,  98, 100,  233,  236   (See  also 
generally  subheading  "Fixed  charges," 
above) 
Account  illustrated.  III,  101 
Journal  entry,  illustrated.  III,  107 
Production-center  system.  III,  289 
Reserve  for  (See  "Reserves") 
S-lling.  I,  68.  97,  98;  II,  299,  477 

As  rate  per  pound  or  per*  ton  of  product 

shipped,  II,  301 
Disposition  of,  II,  301 
Items  included  in,  II,  299 
Ratio  of,  to  production  cost,  II,  300,  301 
Ratio  of,  to  sales,  11,  299,  300 
Problem,  V,  341 
Service,  special,  II,  469 
Sinking  fund,  treatment  of,  IV,  158 
Standing    expense    orders.    III,    31,    224, 
226-232 
Classification,  III,  227,  229-232 
Distribution  sheet.  III,  221 
Distribution,  sub-departments.  III,  266 
List  of  numbers.  III,  227,  229 

Form,  III,  230 
Time  tickets.  III,  227 
Form,  111,228 
Statement    of,    production-center    system, 
III;  308 
Form,  III,  307 
Stock-in-trade,  IV,  227 
Stores  department.  III,  98,  102 
Account,  III,  217 
Account,     illustrated,     production-center 

system.  III,  321 
Applied  direct  to  material.  III,  238,  297, 

302 
On  distribution  sheet.  III,  260,  264 
Sub-departments,  III,  266 


Expense — Continued 

Stores,  incurred  before  receipt.  III,  150; 
IV,  227 

Stores  ledger.  III,  218 

Sub-departments,  III,  265-268  (See  also 
"Machine-rate  method") 

Supplies,   II,   469;   III,   17,   213,   217,   221, 
226-232 
Account,  III,  81,  122 
Charged  direct,  unusual  method.  III,  222 
Included  in  term  "stores,"  III,  23 
Journal  entries,  illustrated.  III,  106 
Posting  from  stores  issued  book.  III,  138 
Process  cost  system.  III,  88 
Production-center  system.  III,  291,  325 
Requisitions,  III,  221,  253 
Standing  expense  orders.  III,  224,  226-232 
Form,  III,  230 

Taxes,  III,  98,  100,  213,  233,  238  (See  also 
generally  subheading  "Fixed  charges," 
above) 
Account,  illustrated,  textile  costs.  III,  399 
Journal  entry,  illustrated.  III,  107 
Machinery,  III,  290 
Production-center  system.  III,  290 

Telephone,  II,  488;  III,  213,  233  (See  also 
generally  subheading  "Fixed  charges," 
above) 

Tools, 

Production-center  system.  III,  291,  322 

Trading  concern,  II,  467-470 

Water,  III,  233,  239  (See  also  generally  sub- 
heading "Fixed  charges,"  above) 

Window  dressing,  II,  469 
Extensions,  Reserve  for  (See  "Reserves") 
Extractive   Industries,   III,    91,    (See   also 
"Process      cost      system,      brick-making 
plant")  * 

F 

Factory, 

Journal,  II,  465 
Ledger,  II,  465;  III,  76 

Controlled  by  general  ledger.  III,  74 
Estimated  cost  system.  III,  358 
Process  cost  system.  III,  328,  343-348 
Forms,  III,  345,  346,  348 
Records  (See  also  "Records") 

Controlled  by  general  ledger;  III,  74 
Federal  Reserve  Board, 

Balance  sheet  form  recommended,  IV,  287 
Form,  IV,  288,  289 


GENERAL   INDEX 


IM 


Federal  Reserve  Board — Continued 

Comparative  profit  and  loss  statement,  IV, 
300 
Form,  IV,  300,  301 
Fee, 

Book,  attorney's,  II,  402 

Form,  II,  402 
Initiation,  club,  II,  449 
Stock-broker's,  II,  423 
File, 

Catalogue,  II,  76 
Quotation,  II,  76,  77 

Order  record,  II,  77 
Source,  II,  77 
Filing, 

Data,  informal,  II,  73 
Invoices,  purchase,  II,  103 
Purchase  orders,  II,  95 
Financial  Department,  Functions  or,  II,  12 
Finished  Goods,  III,  40;  IV,  37 
Account,  III,  79 
Illustrated,  III,  86 
Journal  entry,  illustrated.  III,  108 
Process  cost  system.  III,  91 
Production-center  system,  illustrated.  III, 

325 
Textile  costs,  illustrated,  III,  391,  392 
Definition,  III,  24 
Inventory  or  record.  III,  75,  76 
Ledger,  III,  77 
Form,  III,  78 
Profit  on,  IV,  37 
Finished  Parts  (Stores\  III,  67 
Account,  III,  86 
Definition,  III,  24 
Fire  Loss  Adjustments, 

Problems,  V,  194,  196,  199 
Accounting  for,  IV,  273 
Appraisers,  IV,  268 
Coinsurance  clause,  IV,  268-271 
Apportionment  of  liability,  IV,  270 
Object  of,  IV,  269 
Depreciation  factor,  IV,  274 
Evidences  of  value,  IV,  265 
Insurance  policy,  II,  342-345;  IV,  266 
Register  for,  II,  345 
Form,  II,  344 
Inventory  valuation,  IV,  272 
Liability  of  insurance  company,  IV,  268-271 
Nature  of  problem,  IV,  265 
Proof  of  loss,  IV,  265 
Settlement  of  losses,  IV,  267,  268 


Fiscal  Pebiom,  I,  2S«,  tS9 

Fiscal  Yeah,  as  Coiit  Pnioo.  Ill,  tt 

Fixed  Assets  (See  "Assets,  ftscd") 

Fixed  Charges.  II,  467-<475;  III.  f  IS,  tS»-<l« 

"Account."  illustrsted,  pfniiurtioa  naui 

system.  Ill,  820 
Building  expense.  III.  tS6,  tS7 

Production-cenler  lyitem.  Ill,  tSt.  tit 

Textile  costs.  III,  305 
Cssh  system  expense,  II.  447.  468 
Depredation,  III,  98.  100,  844-fM 

Account,  III.  ««S 

Auxiliary  equipment.  Ill,  t48 

Journal  entry,  illustrated.  III,  18T 

Machinery,  III,  290 

Obsolescence.  III.  245 

Production-center  system,  III«  tf§ 

Rates,  III,  247 

Schedule.  III.  224.  234,  240,  t5S 
Form.  III.  250.  251 

Schedule,  sub-departments,  HI,  ti8 

Schedule,  textile  costs.  III.  507.  808 
Electricity,  III,  288,  289  (See  also  tntnOy 

subheading  "Light  and  beat."  belov) 
Elevator  expense,  II.  469 
Furniture  and  fixtures.  II.  475 
Gas,  III,  213,  238.  289  (See  also  geutnlfy 

subheading  "Light  and  beat."  below) 
Insurance.  II,  470;  III.  98,  100,  flS.  117. 
233,  238 

Account,  illustrated.  III.  10« 

Journal  entry,  illustrated.  Ill,  107 

Production-center  system.  III.  100 

Textile  costs,  account  illustrated.  III.  Itt 
Interest  on  investment.  III.  240 
Light  and  heat.  II.  478.  474;  III.  ft«,  tM 

(See     also     subheadings     ''Electricity.'* 

"Gas,"  above) 
Power,  II.  473;  III.  894 
Rent,  II,  471;  III,  98.  100.  tSS.  tSf 

Account,  illustrated.  III.  101 

Journal  entry,  illustrated.  III.  107 

Production-center  system.  Ill,  180 
Schedule.  III.  224.  288.  258 
Form.  III.  285 

Process  system.  III,  341 
Form.  III.  842 

Sub-departments,  III.  268 
Taxes.  III.  98.  100.  218.  288,  tSt 

Journal  entry,  illustrated.  III.  ItT 

Production-center  tyttem.  III.  €88 

Textile  costs,  accouBt  iUustratsd.  HI.  188 


166 


GENERAL   INDEX 


Fixed  Ch.\bges — Continued 

Telephone,  II,  468;  III,  213,  233 
Window  dressing  expense,  II,  469 
Water,  III,  233,  239 
Fixed  Percentage  of  Diminishing  Value 
Method,  Depreciation  Rates,  I,  322, 
324;  IV,  173 
Problem,  V,  168 
Fixed  Proportion  Methods,  Depreciation 
Rates,  IV,  170-172 
Problems,  V,  16,  18,  168 
Service  method,  IV,  172 
Straight-line  method,  I,  322;  IV,  171 
Working  hours  method,  IV,  172 
Fixed  Rate  of  Expense  Distribution  (See 

"Rates  of  expense  distribution") 
Floor  Space,  Basis  of  Expense  Apportion- 
ment, II,  467 
Flour  Mill,  III,  43,  87,  92 
Fluctuations, 

Prices  of  stores.  III,  142 
Weight  or  volume  of  material.  III,  144 
Folios,  Inserting,  if,  27 
Follow-Up  Systems  and  Devices,  II,  94 
Forfeited  Stock,  IV,  210,  211 
Forms  and  Records,  General  Discussion, 

II,  52-58  (See  also  "Records") 
Foundry,  III,  50 

Defective  castings.  III,  147 
Expense,  III,  261 
Production  order.  III,  50 

Form,  III,  51 
Stores  classification,  I'll,  154 
Four-Column  Journal,  II,  239-241 

Form,  II,  240 
Franchises,  IV,  263,  264 
Depreciation,  IV,  264 

New  York  Public  Service  Commission's  rul- 
ing as  to,  IV,  264 
Valuation,  IV,  63 
Freight  and  Cartage, 
Expense, 

Charging  to  accounts,  I,  97 
Deducted  from  sales,  when,  I,  96 
Stores,  III,  150 
Inward,  analysis  of  account,  I,  411 

Problems,  V,  23,  242 
Outward,  I,  253 
Problem,  V,  23 
Funds  (See  also  "Reserves,"  "Sinking  fund") 
Compared  with  reserves,  IV,  lOd-111 
Creation  of,  IV,  107 


Tv^us— Continued 
Nature  of,  IV,  107 
Trustee  for,  IV,  110 

Furniture  and  Fixtures, 
Problem,  V,  90 
Account,  analysis  of,  I,  409 


Gantt  System  of  Wage  Payment,  III,  204 
Gas  Expense,  III,   213,   233,   239    (See  also 
generally    "Fixed   charges,"    "Light   and 
heat") 
"General  Expense  Account,"  Illustrated. 

Textile  costs.  III,  396 
General  Journal  CSee  "Journal") 
General  Ledger  (See  "Ledger") 
''Gentlemen's  Agreements,"  IV,  331 
Good-W^ill,  I,  370;  IV,  250-257 
Account,  analysis  of,  I,  410 
Accounting  for,  IV,  256,  257 

Dissolution  of  partnership,  I,  COO 
Problems,  V,  56,  140 
Advertising  expense  capitalized  as,  IV,  18 
Corporation  accounting,  I,  369,  370 

Problems,  V,  140,  170,  202 
Defined,  IV,  251 
Depreciation  of,  IV,  255 
Determination,  method  of,  IV,  252 
Patents,  IV,  258-260 
Premiums    and,    on    consolidated    balance 

sheet,  IV,  361 
Relation  to  trade  marks  and  patents,  IV,  260 
Valuation  of,  IV,  253 

Problems,  V,  183,  186,  187,  190,  202,  277, 
288,  312,  328 
Goods,  Finished  (See  "Finished  goods") 
Goods  in  Process  (See  "Work  in  process") 
Graduated  Premium  System  of  Wage  Pay* 

ment,  III,  206 
Graphic  Charts  (See  "Charts'') 
Gross  Profit  (See  "Profits") 
Guests,  Hotel  (See  "Hotels  and  restaurants") 

H 

IIalsey  System,  Payment  of  Wages,  II,  315 
Harvard  Bureau  op  Business  RssEARCii, 

Bulletin  No.  1, 
Conclusions  as  to  gross  profits,  IV,  393 
Hat  Factory,  III,  55 

Form,  III,  57 
IL\.uLiNG  Expense,  Stores,  III,  150 


GENERAL  INDEX 


167 


Heat  and  Light  (See  "Light  and  heat") 
Holding    Company,    IV,    333-352    (See    also 
"Combinations  and  consolidations'") 
Advances  to  subsidiaries,  IV,  343,  373 
Balance  sheet,  IV.  340-352 

Compared  with  consolidated  balance  sheet, 

IV,  340 
Complications,  IV,  343,  344 
Illustrative    statements,    IV,    341,    342, 

347-349 
Method  of  showing  investments  in  sub- 
sidiaries, IV,  347 
Methods  of  presentation,  compared,  IV, 

344-347 
Necessity  for  consolidated  balance  sheet, 

IV,  343 
Objection  to,  IV,  350 
Consolidated  income  statement,  IV,  334-366 
Distinguished    from    combination    by    pur- 
chase, IV,  333 
Formation  of,  IV,  333 
Income,  chief  source  of,  IV,  350 
Not  illegal  per  se,  IV,  33  i 
Profit  and  loss  statement,  IV,  349 
Purpose  of,  IV,  335 
"Restraining"  trade,  IV,  333 
Statements,  IV,  340 

Problem,  V,  300 
Statutes  permitting  formation,  IV,  333 
Working  capital  provided  by  subsidiaries, 
IV,  371 
Home  Office, 
Accounts, 

With  agencies,  II,  374 
With  branches,  II,  376 
Hotels  and  Restaurants,  II,  432-445 
A  la  carte  dining  room,  II,  433-435 
Check  system,  II,  433,  434 
Fraud,  detection  of,  II,  434 
American  plan,  II,  432 
Breakage  of  dishes,  II,  442 
Cash  rece'ipts  register,  II,  440 

Form,  II,  441 
Charge  journal,  II,  439 
Earnings,  monthly,  II,  444 
European  plan,  II,  432 
Expenditures,  II,  441,  442 

Cash  disbursements  record,  II,  441 

Form,  II,  442 
Check  register,  II,  442 
Voucher  register,  II,  441 
Form,  II.  441 


Hotels  and  RasTAPiuom    Camtimttad 

Guests, 

Accumulation  envelope.  II,  440 

Form.  II.  440 
Charge  slip.  II.  4S8.  450 

Form.  11.  430 
Complimentary.  II.  44S 
Departure  record,  II,  44S 
Ledger.  II.  437.  438 

Form.  II.  438 
Recording     services     mnd    cxpradilarw 

chargeable  to,  II,  433 
Register.  II,  436 
Form.  II.  437 
Office,  arrangement  of.  II.  435 
Profit  and  loss  staUment.  form  of.  11.  444. 

445 
Records  required,  II,  436 
Room  ticket,  II.  436 

Form.  II,  437 
Stores,  II.  44i 

Inventory  of.  II.  *M 
Report  of  goods  {'♦•livered,  II,  44t 
Table  d'hote  dining  roooi,  !I,  433 
Working  hours.  II,  433,  438 
Shifts,  II,  435,  436 
House  Accounts,  Club,  II,  450.  45« 

I 

Ice  Factory,  Cost  System.  III.  H 
Idle  Time,  Machines.  Ill,  «95 
Impression  Book,  II.  166,  167 
Imprest  Fund.  I.  «29-«3l;  II.  IW.  IM 

Problem.  V.  7 
Income, 

Accounts,  I,  67 

Posting  to  profit  and  loss  account.  I.  »« 
Accrued. 

Accounting  for.  IV.  iO-«4 
Adjusting  entries.  IV.  <l  <4 
Cash  methods  of  handlin<  accoimU  l\ .  I» 
Distinguished  from  drferrrd  iiKO«»    IV. 
19 
Deferred.  I.  66;  IV.  1*.  30-3< 
Estate  aecountinic  for.  II.  40« 
Miscellaneous,  account,  aiialystt  of.  i.  «« 
Record.  II.  348 
Form.  II.  3*6 
Sales.  I.  67.  HO 
Sinking  fund.  Ireatroenl  of.  IN.  »5» 


168 


GENERAL   INDEX 


Income  and  Expense  (See  also  "Profit  and 
loss") 
Capital,  I,  99 
Income  Statement, 

Consolidated,  IV,  364-366 
Tie-up  with  balance  sheet,  IV,  292 
Income  Tax, 

Bad  debts,  reserve  for,  law  concerning,  IV, 

220 
Consolidated     balance     sheet,     regulations 

covering,  IV,  353 
Penalties  for  intentional  errors,  IV,  388 
Records,  II,  348 

Allowable  deductions  record,  II,  348 

Form,  II,  347 
Income  record,  II,  348 

Form,  II,  346 
Securities  register,  II,  348 
Form,  II,  346 
Index, 

Cards,  II,  67 

For  stock,  II,  390 
Form,  II,  390 
Of  dealers,  II,  76 
Indirect  Expense  (See  "Expense") 
Indirect  Labor  (See  "Labor,  indirect") 
iNDraECT  Material  (See  "Supplies") 
Initiation  Fees,  Club,  II,  449 
Insolvency  (See  also  "Bankruptcy,"  "Reali- 
zation and  liquidation  statement,"  "State- 
ment of  affairs") 
Balance  sheet  illustrating,  I,  134,  135 
Balance  sheet  inadequate,  I,  130,  131 
Defined,  I,  130 
Inspecting  Material,  II,  74 
Inspection  Expense,  III,  226 
Inspective  Accounting,  II,  6 
Installation  of  Accounting  System,  Time 

FOR,  II,  48 

Instalment,  Sales  on,  II,  185-187 

Form,  II,  185 

Problem,  V,  109 
Institutional    Budget,    Illustrated,    II, 

325-327 
Insurance,  I.  65,  98,  117,  119;  II,  342,  345, 

470;  III,  98,  100,  213,  217,  233,  238;  IV. 

265,    276     (See    also    generally    "Fixed 

charges") 
Accident,  III,  238 
Account  illustrated,  III,  102 

Journal  entry  illustrated.  III,  107 

Textile  costs.  III,  399 


Insurance — Continued 
Boiler,  III,  238 

Fire,  III,  238;  IV,  265-276  (See  also  "Fire 
loss  adjustment") 
Coinsurance  clause,  IV,  268-271 
Statement    showing    amounts    and    costs 
illustrated.  IV,  314 
Furniture  and  fixtures,  II,  475 
Liability,  II,  476 

Merchandise  inventory,  advisability  of  in- 
suring, IV,  227,  228 
Policy,  II,  342-345;  IV,  266 
Register  for,  II,  345 
Form,  II,  344 
Problem,  V,  116 
Prepaid,  I,  65,  98,  114,  119;  IV,  14-17 

Account,  analysis  of,  I,  407 
Production-center  system,  III,  290 
Register,  II,  342,  345 

Form,  II,  344 
Stock,  II,  470 

Unexpired,  statement  of  affairs. 
Problems,  V,  66,  70 
Interest, 
Account, 

Problem,  V,  249 
Analysis  of,  I,  423 
Accrued, 

Account,  analysis  of,  I,  417 
Adjusting  entries,  IV,  23-24 
Distinguished   from    "accrued     interest  " 

IV,  13 
Expense,  IV,  27 
Included  in  purchase  price  of  security,  IV, 

133,  134 
Income,  IV,  1^ 

Interest  period  diflFerent  from  fiscal  period, 
IV,  142 
Bank,  I,  111,  220 

Bond,  I,  110,  111;  IV,  123-127,  140-142 
Problems,  V,  146,  148 
Account,  analysis  of,  I,  413 
Accrued     (See     subheading     "Accrued," 

above) 
Effective,  calculation  of,  IV,  127 
Effective,  rate,  IV,  126 
Effective,  recording,  IV,  132 
Instalments,  IV,  126 
Marked  rate,  fluctuation  of,  IV,  125 
Nominal  vs.  effective,  IV,  126,  127 
Paid  on  par  value,  IV,  123 
Payment  of,  IV,  140 


GENERAL  INDEX 


IW 


Interesi' — Continued 

Compound,    IV,    144-146,    153    (See    also 
"Annuity") 
Rule  for  finding,  IV,  153 
Deducted,  cash  book  entry,  I,  217 
Due  date  coinciding  with  fiscal  period  of 

corporation,  IV,  141 
Due  date  not  coinciding  with  fiscal  period  of 

corporation,  IV,  142 
Elimination  of,  on  consolidated  income  state- 
ments, IV,  365 
Income   derived   from,   on   profit   and   loss 

statement,  I,  100 
Mortgages, 

Problems,  V,  66,  70 
Payable,  account,  analysis  of,  I,  413 
Notes  receivable,  I,  299 
On  capital,  I,  348 
Problem,  V,  93 
Paid  borrower  of  stocks,  II,  426 
Partnership,  adjustment  of  capital,  I,  348- 
350 
Problems,  V,  27,  28,  31 
Prepaid,  IV,  14 

Account,  analysis  of,  I,  407 
Interest    on   Investment,   Buildings   and 
Machinery,  III,  240  (See  also  generally 
"Fixed  charges") 
"Interlocking  Directorates,"  IV,  332 
Internal     Checks     for     Prevention     or 
Errors,  IV,  380,  381 
Illustrative  example,  IV,  381 
Inventory, 

Adjustments,  IV,  226 

Problems,  V,  70,  180 
Analysis  of,  I,  403 
Problem,  V,  23 
At  cost,  II,  145 
At  selling  prices,  II,  145 
Controlling  accounts.  III,  79 
Depreciation  factor,  IV,  223 
Ending,  IV,  12 

Estimated,  I,  204,  205;  IV,  394 
Problems,  V,  127,  130,  331 
Testing  by  use  of  gross  profit  percentage, 
I,  205;  IV,  394,  395 
Finished  goods.  III,  75,  76 
Goods  on  consignment,  IV,  222 
Insurance  of,  IV,  227,  228 
Invoices  not  received,  IV,  223 

Problem,  V,  90 
Manufacturing,  IV,  21^ 


Inventory— Coiih'niMf 
Merchandiae.  IV.  Mt-tlt 
Problem,  V,  iS 
When  itema  should  not  be  catcf«4  «•  i^ 
books.  IV,  tiS 
Opening,  trading  entcrpriae.  II.  471 
Overhead  applicable,  IV,  «t7 
Perpetual, 

Advantages,  III,  10 
Card  form.  I.  «01 
Cost  accounting  maintaina.  III,  M 
Necessity  for.  III,  75 
Raw  material.  III.  76 
Schedule,  I,  158 

Purposes  and  uses  of,  I,  158,  IM 
Sheet,  III,  121 

Form,  III,  120 
Stores,  III,  118 

Physical,  III,  10,  121 
Valuation,  I,  123;  IV,  224-n6 

Problems,  V,  108,  127.  ISO,  SSI 
Fire  loss  adjustment.  IV,  f7i 
Verification  of,  IV,  447 

Problem,  V,  338 
Work  in  process.  III.  74 
Investigations.  Special,  I,  9,  10 
Investment,    Buildings    aitd    MAOinisaT, 

Interest  on.  III,  240 
Investment  Ledoeb.  II,  «M 
Investments,  (See  also  "Bonds."  **Slock»'*) 
Accountancy  of,  IV,  0 
Corporations,  in  stock  H  other  rocporatioMw 

IV,  334 
Interest  on  (See  "Interert") 
Real  estate,  IV,  19.  2S9-tS4 
Schedule  of,  I,  159 

Sinking  fund,  IV.  9.  157  (Se«  alM  *'SniUa« 
fund") 
Invoices, 

Classification  of,  indirect  expanse.  III.  tIT 
Subsidiary  ledger.  III.  f  18 
Form,  III,  «19 
Creditors',  procedure  in  haadUng.  U ,  M 
Handling.  II.  74 
Numbering,  II,  89,  90 
Purchase, 
Accuracy  in  handling,  nccesdty  ol.  II.  9t 
Allowances,  checking.  II.  101 
Book.  II.  108,  109 
Cash  discount,  II.  98 
Checking  and  approving.  II,  ••-lit,  •• 
JS^tenaions,  cbeckiag.  II,  101 


170 


GENERAL  INDEX 


Invoices — Contin  ued 
Purchase — Continued 
Filing,  II,  103,  370 
Freight  charges,  checking,  II,  101 
Handling  without  record  of  creditors,  II, 
121-122 
Form,  II,  121 
Numbering,  II,  102 
Procedure  in  handling,  II,  96-103 
Recording,  II,  101-103 
Register,  II,  97 
Form,  II,  97 
Retail  organization,  II,  369 
Rubber  stamp  for  checking  and  approv- 
ing, II,  98 
Form,  II,  98 
Separate  forms  for  checking  and  approv- 
ing, II,  99 
Stamping,  II,  102 
Voucher  system,  II,  118 
Sales,  II,  159-161 

Binding  in  book  form,  II,  167,  168 
Duplicate  loose-leaf,  II,  168 
Retail  organization,  II,  371 
Simplicity  of  form  advantageous,  II,  47 
Unpaid,  Ust  of ,  obtaining,  II,  112 
IssxTiNG  Material,  II,  74 


Jewelry  Manufacturing  Concern,  III,  350 
Job  Cards,  II,  307,  309 
Job  Cost  Sheets  (See  "Cost  sheets") 
Job  Order  System,  III,  13,  29,  41,  47-52  (See 
also  "Cost  accounting") 
Problem,  V,  386 
Jobbing  Organization,  II,  150,  151 

Retail  organization  combined  with,  II,  152- 
154 
Journal, 

Allowance,  II,  336 

Form,  II,  337 
Cash  (See  "Cash  book") 
Cash  sales. 

Chain  stores,  11,  381 
Form,  II,  386 
Columnar,  I,  232-237,  306-309;  11,  C3,  1C5, 
109-115,  164,  165,  236-242 
Forms,  I,  234,  235,  309;  II,  ICG,  111, 
113,  164,  237,  238,  240,  212 
Posting  facilitated  by,  II,  28 
Cut-sheet,  II,  245,  246 
Form,  II,  244 


Journal — Continued 
Development  of,  I,  306 
Entries, 

Closing,  I,  313;  II,  234 

Controlling    accounts    (See    "Controlling 

accounts") 
Date  and  amounts,  I,  174 
Equilibrium  of,  I,  175,  176 
Explanations  covering,  I,  173 
Form  of,  I,  170-172 
Illustrative,    I,    171,    172,    179-187,    307. 

310-313;  II,  233,  234,  245 
Items,  adding,  I,  174 
Kinds  of,  I,  306 
Object  of,  I,  172 
Opening,  I,  180;  II,  233,  23 1 

Form,  I,  181 
Opening  controlling  account,  I,  263 
Partnership  (See  "Partnership") 
Production-centersystem,  III,  31 1,314-318 
Purchases  and  sales,  I,  182,  183 
Receipts  and  payments,  I,  183,  184 
Returns  and  allowances  (See  "Returns") 
Rules  for,  I,  175,  176 
Self-explanatory,  II,  243 
Use  of  "to"  and  "by,"  I,  173,  174 
Factory,  II,  465 
Form  of,  I,  170-172 
Four-column,  II,  239-241 
Form,  II,  240 
Transactions  in  two  kinds  of  money,  II, 
239,  240 
Function  of,  I,  170 
General,  I,  177 
Form,  I,  332 
Development  of,  I,  176,  177 
Entries  included  in,  I,  177 
Hotels  and  restaurants,  II,  439 
Ledger  in  relation  to,  I,  170 
"Left  and  right,"  II,  243 

Form,  II,  244 
Posting  to  ledger,  I,  175,  263,  264 
Purchase,  I,  198-200.  232-239;  II,  105-118; 
III,  81,  122,  130 
Forms,  I,  200,  233;  II,  107,  108 
Analysis  of  entries,  I,  234 
Analysis  of  expense  columns,  II,  110 
And  voucher  register,  distinction  between, 
II,  116-118 
Forms,  II,  117 
Checking  accuracy  of,  U,  112 
Closing,  I,  233,  237 


GENERAT.   INDEX 


171 


Journal — Continued 
Purchase — Continued 

Columnar,  I,  232-237;  II,  109-115 

Forms,  I,  234,  235;  II,  111,  113 
Columnar,  when  undesirable,  II,  116 
Departmental,  simple,  I,  232 

Form,  I,  234,  235 
Expenses  included  in,  I,  236;  II,  110-115; 
III,  213,  217,  224,  253 

Forms,  I,  234,  235;  II,  111,  113,  115,  117 
Folio-column,  I,  236 
Form  of,  I,  198 
Function  of,  I,  198 

Posting  to  general  ledger,  II,  108;  III,  ISO 
Process  cost  system,  III,  339 
Returns,  I,  238 
Summary,  I,  237,  238 
Use  of,  illustrated,  I,  198-200 
Voucher  register,  I,  241 
Retail  organization,  II,  366 
Ruling  when  private  ledger  is  used,  II,  261 
Sales,  I,  207,  208;  II,  165,  166 

Forms,  I,  208,  332;  II,  166 
Advantages  of,  II,  166 
Analytical  form  of,  I,  248 

Form,  I,  250,  251 
Cash  sales,  I,  249-252 
Charge  entries,  I,  249 
C.  O.  D.  sales,  I,  254 
Consignment  and  general,  II,  180 

Form,  II,  176 
Containers,  I,  253;  II,  183 

Form,  II,  184 
Entries  by  number,  I,  249 
Form  of,  I,  207,  208 
Freight  outward,  I,  253 
Function  of,  I,  207 
Proprietor,  sales  to,  I,  252,  253 
Returned  sales,  I,  254 
Special  forms  and  methods,  I,  255 
Sundry  sales,  I,  249,  252 
Terms  of  sale,  I,  248 
Wholesale  concern,  11^171 

Form,  II,  171 
Simple,  developed  from  day-book,  II,  27 
Six-column,  II,  241 

Form,  II,  242 
Posting  to  ledger,  II,  241 
Subsidiary,  I,  188 

Advantages  of,  I,  188,  189 
Columnar,  use  of,  I,  328-337 

Forms.  I,  330-333 


JoDRNAL— -Con/mW 


Three-column,  II,  105.  IM,  |65,  tf7-| 
Forms.  II,  106.  IW,  iS9 
With  sales  column,  II.  |ft4.  105 
Form,  II,  164 
Two-column,  II,  W6,  W7 

Form,  II,  237 
Vouchers,  11,  «S4.  «35 
Form,  II.  235 
Journal-ruled  Leooer.  II,  250 

Form,  II,  251 
Journalizing,  Rules  roA.  I.  173.  176,  ; 


Labor,  II,  303-315;  III,  165-208 
Account,  illustrated.  Ill,  95 

Estimated  cost  system.  Ill,  S59 

Journal  entry  illustrated.  Ill,  107 
Account,  process  cost  system.  Ill,  89 
Accounting    for,    building    contnM-ton.    II. 

457,  458 
Classification,  III.  167.  168 
Cost  period  different  from  pay  perind.  III. 

172 
Direct,  III,  18 

Graphic  chart.  III,  407-417 
Forms,  III.  408.  413.  416.  418 
Indirect  (See  "Labor,  indirect."  below) 
Manufacturing  enterprise,  charging.  II,  4tff. 

463 
Methods  of  distributing  expenae  over  pn>d» 

uct  based  on.  III.  272-282 
Pay-roll  (See  "Pay-roll") 
Piece-work  basis.  III.  169-171 
Production-center  system.  III.  306 
Records.  II.  303-314:  III.  165-lM 

Accuracy  essential.  HI.  165 

Construction  work.  II.  SIS.  314 

Importance  of.  II,  303,  304 

Job  order  system.  II.  307.  308;  III.  23 

Original.  II.  306.  S07 

Process  cost  system.  III.  166 

Purposes.  III.  166 
Salaries  and  separate  record,  II.  303-611 
Time  basis.  III.  109 

Process  cost  system.  III.  167 
Time  records  (See  "Time  records") 
Wage  systems  (See  "Wages") 
Labor.  iNoiRErr.  ITT.  18.  166.  168.  tIS,  ttV 

232.  S20 
Accounts.  III.  221 


172 


GENERAL  INDEX 


Labor,  Indibbct — ConHnued 
Administrative  '  (See    "Adimnistrative    ex- 
pense") 
Chart,  graphic,  HI,  191 

Form,  III,  193 
Classification,  III,  221 
Inspection,  III,  226 
Repairs  to  machinery.  III,  221,  226 
Standing  expense  orders,  III,  31,  224,  226- 
232 
Classification,  III,  227,  229-232 
Distribution,  III,  224 
Distribution,  sub-departments.  III,  266 
List  of  numbers,  UI.  227,  229 

Form,  111,  230 
Time  tickets.  III,  227 
Form,  m,  228 
Land, 
Account,  analysis  of,  I,  408 
Accounting  for,  IV,  231-234 
And  buildings,  need  for  separate  accounts, 
IV,  233 
Problem,  V,  132 
Appreciation  of,  I,  326;  IV,  231 
Depreciation,  IV,  232 
Development  and  carrying  costs,  IV,  234 
Investments  in,  IV,  232,  233 
Purchased  for  resale,  IV,  234 
Value, 

At  purchase  price,  items  included  in,  IV, 

234 
Fluctuations  in,  IV,  231 
L.vw  Offices,   Accounting   fob    (See   "Pro- 
fessional accoimts") 
Lease,  Combination  by,  IV,  337,  338 
Leaseholds, 

Additions  to  leased  property,  IV,  338 
Amortization,  IV,  168,  338 

England,  method  in,  IV,  338 
Depreciation,  IV,  167 
Repairs  and  improvements,   charging,   IV, 

168 
Short-term  vs.  long-term,  IV,  338 
Ledgeb,  (See  also  "Account,"  "Accounts") 
Accounts, 

Forms,  I,  43 
Analysis  of,  I,  399-425 
Arrangement,  I,  259;  II,  270 
Balancing,  I,  44 
Classification,  I,  57-69.  259.  399-425  (See 

also  "Accounts,  classification") 
Forms  of,  I.  42-44 


Ledger — Continued 

Accounts — Continued 
Numbering,  II,  271 
Payable,  I,  267 
Planning,  II,  46 
Receivable,  I,  266 

Single-entry,  insuflBciency  of,  I,  385 
Trial  balance,  I,  71-77  (See  also  "Trial 
balance") 

Analysis  of,  IV,  409 

Attorney's,  II,  401 

Balance  column  in  center,  II,  256 
Form,  II,  254 

Bank  depositors,  II,  253 
Form,  II,  252 

Branch  and  chain  stores,  II,  379,  380 

Card,  I,  260;  II,  67 

Cash  account  in,  II,  194 

Cash  book  not  a  ledger  account,  II,  194 

Club  membership.  IIj  45'2 
Form,  II.  451 

Columnar,  II.  259,  260 

Content  of,  II,  29,  30 

Control,  II,  262 

Controlling  accounts  (See  "Controlling  ac- 
counts") 

Corporation  stock,  II,  261.  262 

Cost,  II,  465;  III,  76  (See  also  "Cost  sheets") 
Controlled  by  general  ledger.  Ill,  74 
Estimated  cost  system.  III,  358 
Process  cost  system,  III,  90,  328,  343-348 

Forms,  III,  344,  346,  348 
Summary,  process  system.  III,  347 
Form,  III,  348 

Creditors,  inadequacy  of,  I,  240 

Dealers,  II,  380 
Form,  II,  383 

Debits  and  credits  in  center,  11,  250 
Form,  II,  249 

Development  of,  II,  29,  30 

Expense.  III.  218.  266,  267 
Form,  III.  219 

Explanation  column,  wide,  II,  253 

Factory,  II.  465;  III,  76  (See  also  subhead- 
ing "Cost,"  above) 

Functions  of,  I,  50;  II,  29,  247 

General, 

"Account,"  III,  360 

Relation  between  cost  accounts  and.  III, 
4,  73 

Hotel  guest,  II,  437,  438 
Form,  II,  438 


GENERAL  INDEX 


178 


Ledger — Continued 
Investment,  II,  262 

Journal  in  relation  to,  function  of,  I,  170 
Journal-ruled,  II,  250 

Form,  II,  251 
Loose-leaf,  I,  260 

Not  accepted  as  evidence  in  courts,  II,  27 
Plant,  III,  220;  IV,  180 

Form,  IV,  182,  183 
Posting  to. 

Advantages  of  columnar  records,  II,  28, 
105,  106,  164 

Controlling  accounts,  II,  200 

Cross-indexing,  I,  175 

Defined,  II,  26,  27 

Errors  in,  detecting,  I,  74 

From  cash  journal,  II,  223,  225 

From  petty  cash  book,  II,  218,  220 

From  six-column  journal,  II,  241 

Labor-saving  devices,  I,  264 

Methods  of,  I,  196,  237,  263,  264,  291-293, 
381 

Posting  ticket,  II,  159-161 

Time  of,  I,  267 
Private,  II,  46,  260,  261 

Cash  book,  ruling,  II,  261 

Controlling  account,  II,  261 

Journal,  general,  ruling,  II,  261 
Purchases,  recording,  I,  200 
Record,  insufficiency  of,  I,  167 

Problem,  I,  167-169 
Recording  accounts   direct  inadvisable,   I, 
167-170 

Example,  I,  167-169 

Reasons  why,  I,  169,  170 
Retail  organization,  II,  371,  372 
Ruling,  II,  30 

Development  of,  II,  248,  250 
Sales, 

Containers  column  in,  II,  185 
Form,  II,  184 

Special  form,  11,  256,  257 
Form,  II,  255 
Self-balancing,  I,  243 
Single-entry  bookkeeping,  I,  381,  882 

Form,  I,  382 
Size  of,  II,  30 
Standard  form,  II,  248 
Form,  II,  249 

Balance  column  at  right,  II,  256 
Form,  II,  255 


Ledo  KB—Contin  ued 
Standard  lorxxk—Cmtimutd 
Double  rolumnn,  II,  457,  t50 
Form.  II,  258 
Stock  (finished  good*).  Ill,  77 

Form.  III.  78 
Stores.  II.  138-145;  III.  76-78,  81.  ||f.  \n. 
218 
Forms.  II.  140;  III.  78.  1«8. 119 
Abstract  of.  II.  143.  144 
Adjustments.  II,  143;  III.  199 
Balance  division.  II.  142.  14S 
Control  of.  II.  143;  III,  190 
Discrepancies.  Ill,  199 
Entries.  II.  190.  141 
Installing.  II.  199 
Loose-leaf,  II.  198 

Form,  II.  140 
Posting   from  stores  recdrgd  book,  HI. 

126,  130 
Process  cost  system.  Ill,  88 
Purchased  division.  II.  190 
Reconciliation  with  general  ledger,  II,  I4t 
Sold  division,  II.  141,  142 
Subsidiary,  I,  259 

Controlling  account  in.  I,  289 
Posting  to,  I.  265.  267 
Reconcilement   of.    with   controltiaf  •»> 
count.  II.  267 
Problem.  V.  11 
Self-balancing.  I.  209 
Tabular.  II.  251 
Transactions,  illustrative.  I.  41 
Trial  balance.  I.  268 
"Left  and  Right"  Journal,  II.  249 

Form,  II.  244 
Letter  Code  of  CLASsincATioN.  III.  153.  IM 

Standing  expense  orders.  111,  987 
Liabilities, 
Accounting  for.  I.  M;  IV.  t4t 
Accrued.  IV.  26 

Problems.  V.  89.  192,178. 180.915.999.  US 
Ascertaining,  method  ol,  I.  49 
Balance  sheet. 

Arrangement  on.  IV,  989 
Classification.  IV.  249 
Contingent.  I.  120;  IV.  949.  947 
Problems.  V.  178.  945 
Accommodation  indorsrmrnt.  IT.  9lt 
Kinds  of.  IV.  247.  249 
Notes  receivable.  discuuBlcd.  I.  IM.  If. 
300.901;  IV.  288 


174 


GENERAL  INDEX 


Liabilities — Continued 

Current.  I,  66;  IV,  242-244 

Accounts  payable,  IV,  243 

Differentiated  from  fixed  liabilities,  IV, 
242 

Discounts,  treatment  of,  IV,  244 

Dividends  declared  but  not  paid,  IV,  244 

Expenses  accrued,  IV,  27,  242 

Manufacturing  business,  IV,  243 

Notes  payable,  IV,  243 

Retail  business,  IV,  243 

Short-term  loans,  IV,  242 
Deferred  (See  "Deferred  credits") 
Defined,  I,  21,  66;  IV,  242 
Fixed,  I,  66;  IV,  242 

Accounts  with  stockholders,  open,  IV,  244 

Bonds  (See  "Bonds") 

Collateral  loans,  IV,  19,  245 

Defined.  IV,  242 

Notes  payable,  certain  kinds  of,  IV,  243, 
244 

Purpose  of,  IV,  242 

Real  estate  mortgages,  IV,  244 
Floating  (See  subheading  "Current,"  above) 
Secured,  I,  133 
Showing  of,  on  balance  sheet,  I,  119,  120; 

IV,  288 
Statement  of,  insolvency  (See  "Statement  of 

affairs") 
Verification  of,  IV,  8,  428 
Verification  of  existence  of,  IV,  419 
Light  and   Heat,   III,    226,   394    (See  also 

"Electricity,"      "Gas";     also     generally 

"Fixed  charges") 
Account  illustrated. 

Production-center  system,  HI,  320 

Textile  costs.  III,  394 
Expense,  distribution  of,  II,  473,  474 
Liquidation,     (See    also     "Realization    and 

liquidation    statement,"    "Statement    of 

affairs") 
Partnership,  I,  352-361  (See  also  "Partner- 
ship") 
Receivership,  I,  142 

Problem,  V,  266 
Status  of  creditors  in,  I,  146 
Liquidators  (See  "Receivers") 
Loans,  on  Collateral,  IV,  19,  245 
"Long"  Account  (See  "Stock  brokerage") 
Loose-leaf, 

Ledger,  I,  260;  II,  138 

Form,  II,  140 


Loose-leap' — Continued 
Records,  II,  60,  01,  64-66 
Advantages  of,  II,  63-65 
Binders,  II,  60,  61 
Disadvantages  of,  II,  65 
Installing,  precautions  taken  in,  II,  66 
Marking  sheets,  II,  66 
Spoiled  sheets,  II,  66 
Unused  sheets,  II,  66 
Use  of,  increase  in,  II,  60 
Stores  ledger,  II,    138   (See  also   "Ledger, 
stores") 
Form,  II,  140 
Loss,  Defined,  I,  32 
Losses,  (See  also  "Debts,  bad") 

Distribution  of,  deficiency  account,  I,  140 

Problem,  V,  61 
Expected,  on  accounts  receivable  and  notes 

receivable,  IV,  13 
Fire  (See  "Fire  loss  adjustments") 
Partnership,  sharing,  I,  358,  359 
Reserve  for  (See  "Reserves") 
Lumber  Industry,  Cost  Accounting,  III, 
150 
Problem,  V,  377 
Lump  Sum  Budget,  II,  316,  317 

M 

Machine-bate  Method  of  Distributing 
Expense  Over  Product,  III,  272,  277- 
279,  287-298,  301-327 

Accounts,  III,  310-327 
Chart,  III,  310 

Form,  III,  312,  313 
Elustrated,  III,  319-326 

Chart  of  procedure.  III,  303 
Form,  III,  303 

Cost  sheet.  III,  308 
Form,  III,  309 

Departmental  division  into  production  cen- 
ters, III,  98,  278,  287,  301 

Illustrative  system.  III,  301-327 

Journal  entries.  III,  311,  314 
Illustrated,  III,  314-318 

Labor  cost.  III,  306 

Machine  expense  account.  III,  296 

Material  cost.  III,  306,  309 

Parts  classification.  III,  305 

Production  orders.  III,  305 

Rates, 

Administrative  expense.  III,  291 


GENERAL  INDEX 


175 


Machine-bate    Method    of    Distributing 
Expense  Over  Product — Continued 
Rates — Continued 

Building  expense,  III,  289 
Charging,  III,  293 
Checking,  III,  294  ' 

Computing,  III,  288-293 
Depreciation  charge.  III,  290 
Insurance  charge.  III,  290 
Power  plant  expense.  III,  289,  290 
Rent,  III,  289 
Repairs  expense.  III,  291 
Schedule  of.  III,  292 
Supplementary,  for  idle  time.  III,  295 
Supplies,  etc.,  expense,  III,  291 
Taxes  charge.  III,  290 
Tools  expense.  III,  291 
Statement  of  expenses,  HI,  308 

Form,  ni;  307 
Stock  list.  III,  304 
Form,  m,  304 
Machinery,    HI,    213,    217,    222    (See   also 
"Machine-rate  method  of  distributing  ex- 
pense") 
Depreciation,  HI,  244-252,  290 
Expense  account.  III,  296 

Elustrated,  III,  323 
Insurance,  III,  290 
Power  expense,  distribution.  III,  260 
Taxes,  III,  290 
Mail, 

Checking  enclosures,  II,  214,  215 
Opening,  II,  214,  215 
Reading,  II,  214 
Receipts  memorandum,  II,  215 
Form,  n,  214 
Mail-order, 

Accounting,  II,  389-395 
Agent's  order  blank,  II,  391 
C.  O.  D.  register,  II,  391 

Form,  II,  391 
Creditors'  accounts,  II,  392 
Purchase  register,  II,  392 
Receipts  and  disbursements,  cash,  II,  39S 

Forms,  II,  394 

Records  required,  II,  389,  390 

Stock  record,  II,  390 

Form,  II,  390 

Business,  II,  151,  389 

Advertising!  II.  395 


M  A I iMiUDKR— Continued 
Handlinfc  of. 

Retail    and    jobbiof 

bined.  II.  IAS 
Retail  bu«ne«.  II,  140 
Maintenance  or  Builoom*  (Sot 

expenje,"  "Repain  aad  roMwsk^) 
Management,  Ernrisirr.  II,  147 

MANUrACTUBINO      AND      PBOnt      AJTD      LOM 

Statement.  III.  100 
MANXTrACTUBiNG  ENTEarBoiE,  (Sw  aI»  "Cm! 
accounting") 
Records.  II.  SOS-SI  4.  4«S,  46ft;  Of.  IW-n 
(See  also  "Records ") 
Form.  II.  464 
Statements.  IV.  S0S-S08  (See  «1m  ""Slal*- 
ments") 
Arrangement  of.  IV.  SOS 
Constituent  parts,  IV.  SOS 
IllustraUve.  IV.  S04-S09 

Problems.  V.  «l.  W8.  «S1.  tSS 
"Manufactdbino  Inventobt."  DcmriBk  tl* 
"Margin"  Deposit,  Stock  Bbokouob.  O. 

423 
Married  Women,  ab  STOcKBoukiaii.  IV,  m 
Material,  (See  also  "Stowe,"  "^ppUtT) 
Account.  lU.  79.  81.  86.  Itt 
Entries,  III.  81 
Estimated  co«t  system.  Qhtftralcd,  III* 

S59 
lUustrated.  HI.  8S 
Journal  entries,  illustrated.  Ill,  lOi 
Production-center  system.  III.  Si4 
TexUle  costs,  HI.  S«7.  8«8 
BUI  of.  UI.  1S5 

Form.  III.  1S5 
Contractors,  buUdinf,  i 

for,  II.  457 
Costs. 
Estimated,  III.  SS 
Process  method.  III.  86 
EsUmatcd  cost.  III.  •*-«.  149  (S«  •*» 

"Estimated  cost  system") 
Included  in  term  "stores,"  III.  tS 
Indirect,  III.  17  (See  J 
Inspecting.  II,  74 
Inventory  or  record.  III.  7f 
Issuing.  II.  74  (See  also  I  " " 

sition."  below) 
Parts  classification.  III.  S05 
Purchasing.  II.  87.  W  (See  •!» 
purchase."  "B«|ui*lkMi.  pwrcke*  ) 


176 


GENERAL   INDEX 


Material — Continued 
Received, 

Delivering  to  departments  direct,  II,  136, 

137 
Receipt  form,  II,  134,  135 
Recording,  II,  100 
Report,  II,  135,  136 
Forms,  II,  135,  136 
Receiving,  II,  74,  134-137 
Record  on  cost  sheets.  III,  131,  306 

Proof  of.  III,  132 
Records,  III,  76  (See  also  "Stores") 
Requisitions,  II,  141;  III,  39,  55,  133 
Forms,  III,  34,  57,  134 
Analysis,  III,  226 
Chain  stores,  daily,  II,  380 

Form,  II,  383 
Classification,  III,  131,  136 
Contractor's,  building,  II,  457 
Parts,  III,  67 

Posting  to  general  ledger.  III,  131,  136 
Process  cost  system.  III,  134 
Production-center  system.  III,  306 
Purposes  of,  III,  134 
Record  on  stores  ledger,  HI,  127,  306 
Stock,  II,  159 

Summarized  in  stores  issued  book,  m,  131 
Supplies,  on  distribution  sheet,  HI,  224, 

253 
When  impracticable  to  use.  III,  148 
Sheet,  III,  135 

Form,  III,  135 
Stock  list.  III,  135,  304 

Form,  m,  135,  304 
Stores  department  expense  applied  direct 

to.  III,  268,  297,  302 
Storing  (See  "Stores  department") 
Material  Cost  Method  of  Distributing 

Expense  Over  Product,  HI,  272,  281 
Materials  Ordered  Register,  II,  86 
Mathews,   George,   Quoted   on  Supervis- 
ion, II,  50 
Maximum  Stores,  II,  133 
Mechanical  Aids  (See  "Aids,  mechanical") 
Membership  Ledger,  Club,  II,  452 

Form,  II,  451 
Mercantile  Business   (See  "Trading  busi- 
ness") 
Merchandise, 
Account, 

Problems,  V,  23,  196 
^Adjusting,  I,  81 


Merchandise — Continued 

Gross  profit  on,  ascertaining,  I,  81 

Problem,  V,  127 
Inventory  (See  "Inventory") 
Sales  to  proprietor,  I,  209 
Sold,  determining  cost  of  (See  "Cost,  goods 
sold") 
Merchandise  Returned  Memorandum,  II, 
123,  124 
Form,  II,  124 
Merchandise  Stock-in-Trade,  Defined,  IV, 

215 
Messenger  Service,  III,  221  (See  also  gen- 
eral subject  of  "Labor,  indirect") 
Methods  of  Cost  Accounting   (See  "Cost 

accounting") 
Methods  of  Distributing  Expense  Over 
Product  (See  "Expense,  distribution  over 
product") 
Minimum  Stores,  II,  132,  133 
Mining,  III,  91,  328  (See  also  "Process  cost 

system,  brick  making  plant") 
MiNORiTr     Interests     (See     "Corporation, 

subsidiary") 
Mixed  Accounts,  I,  79-83 
Problem,  V,  23 
Adjusting,  I,  80-83 
Mnemonic  System   of   Stores   Classifica-* 

tion,  III,  159 
Modernization  of  Accounting  Methods,  I, 
3-5 
Purposes  of,  I,  4 
Monthly  Reports  of  Production,  HI,  336 

Form.  Ill,  337 
Mortgages,  I,  124,  125;  IV,  244,  245 
Accrued  income  from,  IV,  19 
Compared  with  corporate  bonds,  IV,  121 
Interest  (See  "Interest") 
Payable,  account,  analysis  of,  I,  418 
Recei viable,  account,  analysis  of,  I,  404 
Schedule  of  investment,  I,  159 
Treatment  of,  statement  of  affairs,  I,  138 
Problems,  V.  66,  70 

N 

"Needle"  Industries,  Estimating  Cost  in, 

III.  65 

Net  Profit  (See  "Profits") 
Net  Worth  (See  "Capital") 
New  York  Public  Service  Commission, 
Ruling  as  to  charges  to  franchise  account, 

IV,  264 


GENERAL  INDEX 


177 


Nominal  Accounts,  I,  59 
Non-productive    Departments,     (See    aUo 
"Administrative  expense,"  "Building  ex- 
pense," "Power  plant  expense,"  "Stores 
department  expense") 
Accounts,  III,  102,  268 
Dfetribution   of   indirect   expense.   III,   99, 
103,  104,  257-270 
Sub-departments  expense.  III,  265-268 
Expense,  indirect, 
a»rt.  III.  212 
Form,  III,  216 
Non-productive    Labor    (See    "Labor,    in- 
direct") 
Notes, 

Collected  by  bank,  I,  221 
Compared  with  bonds,  IV,  122 
Discounted,  I,  299,  300 

Contingent  liability,  I,  120,  157,  300,  301 
Dishonored,  I,  302 

Payment  of,  journal  entry,  I,  301,  802 
Dishonored,  I,  296,  302 

Accounting  covering,  I,  298 
Interest,  I,  297,  298 
Paid  for  depositor,  I,  222 
Payable,  I,  294,  304;  IV,  243,  244 
Account,  analysis  of,  I,  415 
Register,  I,  303;  II,  334 

Form,  II,  335 
Schedule  of,  I,  157 

Treatment  of,  statement  of  affairs,  I,  139 
Promissory,  defined,  I,  294 
Protest  of,  I,  221,  298 
Charging  fees,  I,  221 
Receivable,  I,  294;  IV,  13 
Account,  analysis  of,  I,  402,  40S 
Accounting  covering,  I,  296 
Collected,  accounting  covering,  I,  297 
Discounted,  I,  299-302 

Problems,  V,  13,  61,  70  319,  345 
Discounted,  account,  analysis  of,  I,  418 
Schedule  of,  I,  157 
Register,  I,  297,  303;  II,  334 
Form,  II,  335 
Notions  Manufacturing  Concern,  III,  350 
Number,  Order,  III,  33 
Numbering  Contracts,  II,  454 

Machine,  II,  358 
Numerical  System  of  Classification, 
Accounts  II,  268,  271,  277-283 


NuMmcAL  Sr»rsM  or  ^'  — fnriTicwi    Cje 
tinned 


Standing  exprnae 
List.  III.  W7. 
Form,  III,  290 
Stores,  ill.  155 


ordsn.UI.tt9-ttt.MT 


Obsolescence,  I,  815,  816;  III,  ttf 
OrncE, 
Administration  department,  II,  It 
Arrangement,  hotels,  II,  485 
Blotter,  attorney's,  II,  890.  89T 

Form,  II,  897 
Expense  (See  also  "Admtnislrativ*  csp*w*1 
Account,    illustrated,    textile   cmU,   III, 
896.  397 
Routine,  II,  49,  50 
Opening  Entries  (See  "Entries,  t 
Operating    Departmentk.    (See 
ductive  departments") 
Subdivided    into   productioa   cestera.    Ill, 
278,  287,  301 

Operative  Accountino,  II,  6 
Order. 
Follow-up  systems  and  devton.  II,  9i 
Record,  kept  in  quoUtion  file.  II,  77 
Register.  II.  840,  841 

Form.  II.  339 
Shipments  on,  II,  04.  M 
Order  Method  or  Coar-nwiMiMi,  m.  ||^ 
41.  47-52  (See  also  "Cost  accooali^^ 
Entries  in  controUioc  noeottaU  III.  tl-tl^ 
95,90 
Orders, 

Production.  III.  tO.  50.  55.  SOC 

Forms.  III.  Si.  51.  57 

Authorization  of,  III.  9i 

Form.  III.  Si 
Combination.  III.  55 

Form.  III.  57 
Cost  sbeeU  (See  "Coat  slweU**) 
Coupon.  III.  58 

Form.  III.  59.  flO 
Numbering.  III.  88 
Parts  product.  III.  67 
Process  cost  syttrm.  III.  ISt 

Form.  III.  187 
Sources  of.  III.  SI 
Summary  of  storea  kmtd,  HI.  Iti 


178 


GENERAL   INDEX 


Orders — Continued 
Purchase,  II,  88-93;  III,  124 
Form,  II,  89 

Checking,  II,  95 

Copies,  number  of,  II,  90 

Filing,  II,  95 

Handling  of,  II,  74 

In  duplicate,  II,  91 

In  quadruplicate,  II,  92 

In  triplicate,  II,  91 

Numbering   bills   and  invoices  to  corre- 
spond with,  II,  89 

Papers  accompanying,  numbering,  II,  90 

Placing,  II,  87,  88 

Procedure  in  handling,  II,  90-93 

Punching,  II,  90 

Receiving  clerk's  copy,  II,  92 

Register,  II,  93,   94 

Used  as  material  received  form,  II,  100 
Replacement,  III,  146 
Sales,  II,  156-161 

Accounting   department,  routine   in,   II, 
160,  161 

Acknowledgment  of,  II,  159 

Approval  of,  by  credit  department,  II,  157 

Duplicate  copies,  II,  158-160 

Handling  of,  importance  of  careful,  II,  156 

Interpretation  by  order  department,  H, 
158 

Invoice,  II,  159-161 

Order  blank,  II,  172 
Form,  II,  172 

Order  department  copy,  II,  159 

Package  labels,  II,  159 

Posting  ticket,  II.  159-161 

Recording,  uniform  blank,  II,  156 

Sales  register,  entering  on,  II,  157 

Shipping  tickets,  II,  159,  160 

Stock  requisition,  II,  159 
Standing  expense    (See  "Standing  expense 

orders") 
Obqanization,  II,  4,  9-23;  IV,  390 
Business,  H,  9-23  (See  also  "Business") 
Capitalization,  II,  4 
Chart,  II.  21-23 

Form,  II,  22 
Control  of,  II,  4,  12,  IS 
Corporation,  II,  18-20 

Form,  II,  19 
Expense,  IV,  14,  17 

Problems,  V,  207,  304 

Account,  analysis  of,  I,  406 


Organization — Continued 
Jobbing,  II,  150,  151 

Retail  combined  with,  II,  152-154 
Lines  of.  general,  II,  20,  21 
Officials,  importance  of  a  budget  to,  II,  318 
Partnership,  II,  13,  17 
Forms,  II,  14,  15,  16 
Place  of  accounting  in,  II,  4 
Proprietorship,  II,  13 
Purchase  department,   II,  69-75  (See  also 

"Purchasing  department") 
Retail  (See  "Retail  organization") 
Sales  department,  II,  148  (See  also  "Sales 

department") 
Scope  of,  II,  9 
Types  of,  II,  12,  13 
Wholesale  (See  "Business,  wholesale") 
Original  Entries,  I,  39-41;  H,  30,  31 
Original  Entry,  Books  of  (See  "Books  of 

account,  original  entry") 
Overhead  (See  "Expense") 
Overpayments, 

avoiding  in  partnership  dissolution,  I,  356- 
358 
Problems,  V,  35,  37 
Refunds  for,  I,  112 
Overtime,  Effect  on  Expense  Distribu- 
tion Rates,  III,  282 


Package  Labels.  II.  159 
Paper  Mill.  Ill,  43,  50 
Partnership, 

Accounting.  I.  338-361;  II,  17,  18 

Problems,  V,  27,  31.  56.  116.  140.  183, 
186,  187.  190 
Capital  indefinite,  opening  entry.  I,  341, 

342 
Features  of,  special,  I,  338 
Interest.  I.  348-350 

Problems.  V,  27.  31 
No  capital  contributed,  opening  entry,  I, 

342 
Opening  entries,  I,  339-343;  II,  233 
Form,  I,  339,  340 
Problem,  V,  88 
Agreement,  II,  13,  17 
Capital, 

Accounts,  I,  338 

Problems,  V,  116,  183,  187 
Adjustments,  I,  348-350 


GENERAL  INDEX 


17f 


Partnership — Continued 
Capital — Continued 

Assets  other  than  cash,  I,  339 
Denned,  I,  18 
Dissolution,  I,  352-361 

Problems,  I,  355;  V,  34,  35,  37,  39,  42, 
190 
Accounting  covering,  I,  354 
Causes  of,  I,  352,  353 
Debit  balance  against  partner,  I,  358,  359 
Distribution  of  assets,  I,  353 

Problems,  V,  34,  35,  42 
Distribution  of  proceeds,  I,  356 
Distribution     of     proceeds,     instalment 

method,  I,  356 
Losses,  sharing,  I,  357-359 
Methods  of,  I,  352 

Overpayment    of    partners,    avoiding,   I, 
356-358 
Problems,  V,  35,  37 
Procedure,  I,  353 
Sale  of  business,  I,  359-361 
Good-will,  accounting  for,  I,  360 

Problems,  V,  56,  140 
Net  profit  retained  as  capital,  IV,  95 
Organization,  II,  13-17 
Charts,  II,  14,  15,  16 
Articles  of,  II,  13 
Profits  and  losses,  division  of,  I,  343 
Problems,  V,  27,  31,  183,  187 
Bases  of,  I,  344 

Capital  and  time,  basis  of,  I,  345-347 
Capital  invested,  basis  of,  I,  344 
Fixed  percentages,  I,  344 
Salaries,  I,  348,  350,  351 

Considered  as  expense,  I,  351 
Sale  of  business,  I,  359-361 
Withdrawals,  I,  348,  349 
Parts, 

Account  illustrated,  production-center  sys- 
tem, III,  324 
As  stores.  III,  115 
Classification,  III,  305 
Finished,  III,  67 
Account,  III,  86 
Definition,  III,  24 

When  "stores"  and  when  "stock,"  III,  24 
Parts  Product,  III,  66 
Patents, 

Accounting  for,  IV,  259,  260 
Defined,  IV,  257 
Depreciation  on,  IV,  258 


Patents — Continued 

Relation  to  good-irill  and  tnil».MAfkji,  IV 

260 

Pattern  Costs,  III,  5«,  t81 
Pat  Pebiod.  II,  804;  III.  tS 
Pay-Roll,  II,  309-31 S.  437.  474;  III.  IfT.  |«. 
172.   187  -  193.  SS9  (Sc«  sl»  "Ubcr. 
indirect") 
Forms,  III,  188-100,  S40 
Account,  III,  89.  94 

Process  cost  system.  III.  89 
Account  illustrated.  III.  95.  107 
Journal  entry  illustrated.  III.  107 
Production-center  system.  III.  MS 
Textile  costs.  III.  400 
Accounting  procedure  for.  II.  S1I.  Sit 
Analysis.  II.  475;  III.  172.  ttS 
Charts,  graphic.  III.  100 

Forms,  III.  192.  19S 
Contractor's,  building.  11,  4d7,  4S8 
Cost  period  different  from  psy  period.  III. 

172 
Departmental  distribution.  D.  478;  III.  IM, 

168.  220,  226-232 
Padding,  guarding  against.  LI,  81t 
Period.  II,  304;  III.  23 
Process  cost  system.  III,  88.  390 

Form,  III,  340 
Record,  chain  stores,  II.  881 

Form.  II.  887 
Routine.  II.  309-812 
Sources  of  data.  III.  88 
Time  sheets,  II,  310,  811;  III.  178.  Itt 
Pay  Systems  (See  "Wages") 
Payments, 

And  disbursements,  distinctkm  b«t«««a,  I. 

107 
Cash.  I.  104-115;  II.  192.  803,  401.  HI  (8m 
also  "Cash  disbursements."  "SUIraMSU. 
receipts  and  pay  menu") 
Febcentaoe  or  DiMiN»niMO  VAtim  Uwfmem 
orCAuroLATiNo  DsrftacuTWii.l.M** 
824;  IV.  178.  174 
Problem.  V.  108 
Percentage  or  Gross  PRonr.  IV,  SN  SSI 
Based  on  sales.  IV.  88<-8»« 
Harvard   Bureau  of   BoiiasM  RtMSft^ 
IV,  895 
Estimated  inventory,  tcstinf.  IV.  SM 
Test  for  detection  of  errors,  IV.  aSt-SM 


180 


GENERAL  INDEX 


Percentage    op    Labor    Method    of    Dis- 
tributing Expense  over  Product,  III, 
274-275 
Percentage  of  Turnover,  IV,  395-398 

Illustrative  calculation,  IV,  397 
Percentages, 

Based  on  cost,  compared  with  selling  price 

basis,  II,  293 
Predetermined,  detecting  errors  by,  IV,  391- 

399  (See  also  "Errors") 
Use  of,  for  comparison  tests,  IV,  398 
Use  of,  in  statements,  II,  292,  293 
Period,  Cost  (See  "Cost  period") 
Perpetual  Inventory  (See  "Inventory") 
Personal  Accounts,  I,  58,  59 
Petty  Cash  (See  "Cash,  petty") 
Photographing  Machine,  II,  357 
Physical  Inventory  of  Stores,  III,  121 
Piice-Rate  Method  of  Wage  Payment  (See 
also  "Piece-work,"  below) 
Differential    piece-rate    method,    II,    305; 

m,  200 
Straight  method.  III,  197-200 
Fixing  rate.  III,  198 
PIECE-WORK,  III,  169-171 
Chart,  graphic.  III,  191 

Form,  III,  192 
Pay-roll,  III,  187 
Form,  III,  188 
Time  card.  III,  170,  184 
Forms,  III,  184.  186 
Coupons,  III,  185 
Form.  Ill,  186 

Plant. 

Account,  IV.  181    184 

Assets,  III,  213,  217,  222;  IV,  179 

Building  expense  (See  "Building  expense") 

Cost  should  be  entered  in  full,  IV,  233 

Depreciation  (See  "Depreciation") 

Items,  classification  of,  IV,  179 

Ledger,  IV,  180 

Form,  IV,  182,  183 
Losses  on,  accounting  for,  IV,  235 
Repairs  and  renewals,  IV,  235-237  (See  also 

"Repairs  and  renewals") 
Valuation  at  cost  includes  what,  IV,  231 
Plant  and  Sundry  Assets  Account,  I,  371 

Problems,  V,  170,  202,  277,  281 
Pledge  Record,  II,  341 

Form,  II,  341 
Pledgee's  Right  to  Dividends,  IV,  68,  69 


Policies,  Insurance,  II.  342-345;  IV,  266 
Register  for,  II,  345 
Forms,  II,  344 
Pools,  IV,  331 

Posting  (See  "Ledger,  posting  to") 
Power  Expense, 

Account  illustrated,  textile  costs.  III,  394 
Power  Plant  Expense, 
Account,  III,  217 
Account  illustrated,  III,  103 

Journal  entry  illustrated.  III,  107 
Distribution  of,  II,  473,  474;  III,  260 
Process  system,  III,  344 
Production-center  system.  III,  289,  290,  319 
Account  illustrated.  III,  319 
Premium  Basis,  Payment  of  Wages,  II,  305 
Premium  System  of  Wage  Payment,  III,  202 

Graduated  method.  III,  206 
Premiums, 

Bond  (See  "Bonds") 
Insurance,  paid  in  advance,  IV,  14-17 
Stock  (See  "Stock") 
Preferred  Claims,  Statement  of  Affairs, 
I,  133;  IV,  323 
Problem,  V,  61 
Prepaid  Expense,  I.  63,  65,  98,  113,  119;  III, 

98,  101,  217;  IV,  12-19 
Price  Agreement  with  Supply  House,  II,  88 
Prices, 

Securing,  purchasing  department,  II,  73 
Selling  (See  "Selling  price") 
Stores,  III,  123,  128 

Fluctuations  in.  III,  142 
Prime  Cost,  Elements  of.  III,  16 
Prime  Cost  Method  of  Distributing  Ex- 
pense Over  Product,  III,  272,  281 
Principal,  Estate  Accounting  for,  II,  408 
Printing  Plant,  III,  42 
Problem,  V,  386 
Daily  time  sheet.  III,  182 

Form,  III,  183 
Production  order.  III,  33 
Form,  III,  32 
Private, 

Cash  book,  II,  228 

Form,  II,  229 
Ledger,  li,  260,  261 
Process  Cost  System,  III,  12,  43-49,  86-95. 
3^<-3^S 
^-oblems,  V,  3t7,  351,  353,  357  s 
Account  cla§§ifiv:ation,  III,  323 


GENERAL  INDEX 


181 


•Trocess  Cost  System — Continwd 
Accounts,  III,  271 
Problem,  V,  357 
Brick-making  plant.  III,  46,  50,  87,  328-348 
Accounts,  III,  328,  343-347 

Forms,  III,  344,  346 
Administrative  expense  account.  III,  344 

Form,  III,  344 
Brick  production  record,  daily,  III,  334 

Form,  III,  334 
Broken  brick  record,  daily,  III,  335 

Form,  III,  335 
Broken  brick  record,  monthly.  III,  336 

Form,  III,  337 
Cost-estimating    for    special   orders,    III, 

329,  330 
Cost  ledger,  III,  328,  343-348 

Forms,  III,  345,  346 
Cost  ledger  summary,  III,  347 

Form,  III,  348 
Drawing  report.  III,  332 

Form,  III,  333 
Fixed  charges  schedule.  III,  841 

Form,  III,  342 
Kiln  record,  III,  337 

Form,  III,  338 
Pay-roll,  III,  339 
Form,  III,  340 
Power  plant  expense.  III,  34S 
Purchase  journal.  III,  339 
Setting  report.  III,  332 

Form,  III,  333 
Time  ticket,  III,  179,  331 
Form,  III,  180 
Cement  plant.  III,  87 
Classification  of  stores.  III,  131 
Closing  controlling  accounts.  III,  90,  106- 

108 
Combined  with  order  system.  III,  48 
Compared  with  order  system.  III,  95 

Problems,  V,  347,  351 
Cost  ledger.  III.  90 
Defined,  III,  41 
Distribution  of  costs  direct  to  product.  III, 

92 
Distribution  of  expense,  over  product,  III, 

271 
Distribution  of  manufacturing  costs,  III,  92 
Entries  in  controlling  accounts.  III,  86-96 
Expense,  indirect. 

Accounts,  III,  89,  106-108,  269,  344 
Distribution,  III,  89,  271 


Pboci»9  Co»iT  SYtTCM — ComHm^ 
Expense.  Indirect— CoMlimMrf 

Distribution  dirrrt  to  product.  III.  44,  H 
Flour  mill.  III.  87 

Journal  entries,  illustrated.  III.  10«-1M 
Labor.  III.  88.  »4.  165 

Account,  illustrated.  III.  M 
Records.  III.  10« 
Time  basis  of  payment.  III,  Iff? 
Material  cost.  III.  86 
Material  requisitions.  III,  ISi 
Pay  roll.  III.  839 
Form.  III.  340 
Account.  III.  89 
Analysis.  III.  712 
Per  unit  of  product.  Ill,  47 

Problems.  V,  353.  357 
Production  reports.  Ill,  4S 

Form,  III.  45 
Purchase  journal.  III.  SS9 
Stores  classification.  III.  ISI 
Stores  issued  book.  III.  198 
Stores  ledger.  III.  88 
Supplies  account.  III.  88 
Textile  costs.  III.  363   (See  alw  Tcstib 

costs") 
Textile  costs,  illustrated.  Ill,  8« 
Work  in  process  account.  III.  88 
Closing,  III,  90 
Illustrated.  III.  90 
Product. 

Distribution  of  expense  over.  III.  ••.  tl*. 
225.  271-280  (Sc«  also  under  Exprntr**) 
Pboddction-Center  Mcthoo  or  Di«Tmi»trr- 
iNo  Expense  (Sec  "Machine-rate 
method") 
Pboddction  Chabt.  GRAraic.  III.  4IS 

Form,  III,  4 IS 
Production  Orders  (See  •'Orders") 
Production  Reports.  III.  44.  SS«  5S9 
Forms.  III.  45.  SSS-SS5.  SS7.  S98 
Summary. 

Daily.  III.  337 

Form.  III.  338 
Monthly.  III.  SS6 
Form.  III.  SS7 
Weekly.  III.  44 
Form.  III.  45  , 

Productive  Departheitts, 
Functions  of,  II.  10 
Indirect  expense,  III,  til 


182 


GENERAL  INDEX 


Productive  Departments — Continued 
Indirect  Expense — Continued 
Chart,  III,  212 

Form,  III,  214,  215 
Distribution  over  departments.   III,  99, 
103,  104  (See  also  "Expense,  distribu- 
tion") 
Indirect  expense  account, 
Illustrated,  III,  104 
Journal  entry,  illustrated.  III,  107 
Productive-center     sub-departments,     HI, 
278,  287 
Productive-Hour  Method  of  Distributinq 
Expense  Over  Product,  III,  272,  275- 
277 
Professional  Accounts,  II,  396-403 

Card  system  for  laying  out  daily  work,  II, 

397,  398 
Collection,  II,  402,  403 
Estate  records,  II,  402 
Fee  book,  II,  402 

Form,  II,  402 
Journal,  cash,  II,  399-401 

Form,  II,  400 
Ledger.  II,  401 
Office  blotter,  II,  396,  397 

Form,  II.  397 
Payments,  cash,  II,  401 
Time  cards,  II,  398,  399 
Form,  II,  398 
Profit  and  Loss  Account,  I,  83-87;  II,  264; 
III,  109 
Form,  I,  86 

Problems,  V,  132  215  253,  266,  377,  399 
Adjusting  entries,  I,  85 
Analysis  of.  I,  425 
Closing  entries,  I,  83-85,  91,  92 
Nominal,  I,  59 

Subsequent  facts,  recording,  I,  49-51 
Time  of  opening,  I,  84 
trial  balance,  I,  89-91 

Form,  I,  90 
Use  of,  I,  52 
Profit  and  Loss  Statement,  I,  89-103;  II, 
290;  III,  109;  IV,  294-302 
Form,  I,  336,  337 

Problems,  V,  45-112,  132,  190,  337.  395 
Accounting  procedure,  I,  95-102 
And  account,  distinction  between,  I,  95 
Capital  expenses,  IV,  296,  297 
Comparative, 

Problem,  V,  395 


Profit  and  Loss  Statement — Continued 
Compara  ti  ve — Contin  ued 

Federal  Reserve  Board  form,  IV,  300 
Form,  IV,  300,  301 
Corrected,  I,  101,  102 

Form,  I,  101,  102 
Definition,  IV,  294 
Form  of,  I,  94,  95 

Hotel,  II,  444,  445 
Function  of,  I,  89 
Holding  company,  IV,  349 
Illustrative  form,  IV,  298,  299 

Form,  IV,  299 
Incorrect,  I,  92 

Form,  I,  92.  93 
Manufacturing  company,  illustrative  state- 
ments, IV,  299,  307 
Mercantile  business,  illustrative  statement, 

IV,  316 
Operating  expenses,  IV,  296 
Profit  or  loss  resulting  from  operations,  IV, 

295 
Purpose.  IV,  294 

Supporting  schedules,  IV,  301,  302 
Title  of,  I,  93,  94 
Profit,  Book,  II,  871 
Profit  or  Loss, 

Determination  of,  I,  79-87 
Double-entry,  I,  79 
Proving  correctness  of,  I,  87 
Shown  by  cost  accounting,  III,  4 
Single-entry  bookkeeping. 

Asset  and  liability  method,  I,  392,  393 
Formulas  for  determining,  I,  390-392 
Inadequacy  of,  I,  394 
Method  of  determining,  I,  389,  390 
Summary  of  changes  of  assets  and  liabili- 
ties, I,  389 
Form,  I,  389 
Tangible  and  intangible  assets,  I.  393,  394 
Profit-Sharing,  Partnership,  I,  343,  347 
Profits,  (See  also  "Surplus") 
"^Anticipation  of,  IV,  36-38,  53,  60,  61 
Apportionment,  IV,  6 
Available  for  dividends,  IV,  58-61 
Capital,  IV,  34 
Classification,  IV,  34 

Contingent,  in  branch  accounting,  IV,  38,  31), 
366,  367 
Problems,  V,  106,  108,  119 
Corporations,  IV,  59-61,  95 

Close,  distribution  of  profits,  IV,  56 


GENERAL  INDEX 


183 


Profits — Continued 

Corporations — Continued 
^    -  DiflFerences  of  opinion  as  to  what  con" 
stitutes,  IV,  60 
Errors  affecting,  IV,  93  (See  also  "Errors") 
Expenditures  for  betterments,  IV,  61 
Invested  profits,  IV,  59,  60 
Irregular  distribution,  IV,  56 
Ownership  of,  IV,  55 
Passed  over  to  surplus,  IV,  59,  60,  95 
Source  of  dividends,  IV,  56-58 
Subsidiaries,    prior   to   consolidation,   IV, 
359,  360 
Problem,  V,  293 
Cost  of  production  and,  II,  70 
Definition,  I,  31,  32;  IV,  33 
Determination  of,  II,  365;  IV,  6,  33-5S 
Appraisal  of  asset  values,  IV,  41,  42 
Aspects  of  value,  IV,  42,  43 
Asset  and  liability  method,  IV,  52 
Capital  profit,  IV,  34 
Capital  vs.  revenue  expenditures,  IV,  45, 

61 
Problems  of,  IV,  40 
Profit  or  loss,  I,  79-87,  389-394;  IV,  52 
Repairs,  renewals  and  replacements,  IV, 

47-49 
Summary  of  principles  of,  IV,  53 
Valuation,  basis  of,  IV,  44 
Valuation,  kinds  of,  IV,  42,  43 
Valuation,  sources  of  data  for,  IV,  45 
Division  of  partners',  I,  343-347 
Problems,  V,  27,  31,  183,  187 
Effect  of  appreciation  on,  IV,  50 
Effect  of  depreciation  on,  IV,  49 

Problem,  V,  132 
Eliminations,  on  consolidated  income  state- 
ments, IV,  365 
Expected,    and    realized,    discrepancy    be- 
tween. It,  145 
Factors  on  which  dependent,  II,  14G 
Gross,  I,  81,  85,  96,  110,  200,  201;  II,  144, 
475-477;  IV,  35 
Problems,  V,  23,  127,  341 
Harvard    Bureau    of    Business  Research, 

Bulletin  No.  1,  IV,  393 
Manufacturing  profits  differentiated  from, 

IV,  35 
Percentage  of,  test  for  detection  of  errors, 
IV,  392-394   (See  also  "Percentage  of 
gross  profit") 
Increasing,  II,  70 


Profits — Continued 
Instalment  nalcs,  fT.  IS5-187 

Problem.  V,  100 
Intercompany,  IV,  366 
Interdepartmental,  IV,  S8 
Manufacturing,  IV,  35 
Net, 

Problems.  V.  88.  97,  841 

Corporations,  IV,  59,  95 

Defined,  IV.  39 

Determining.  I,  85.  86 

Partnership.  IV,  95 

Sole  proprietorship,  IV,  95 
On  finished  goods,  IV,  37 
On  sales,  analysis  of,  II,  477-470 

Form.  II.  478 
On  work  in  process,  IV.  36 
Prepaid  expenses  as  affected  by  trc«iaeai 

of,  IV.  14 
Recording  items  affecting,  I,  50-52 
Retained  as  capital,  IV,  95 
Trading,  IV.  85 
Profits  of  Different  Linhk 

Cost  accounting  indicates.  III.  5,  6 
Property  Dividends,  IV,  75,  9i 
Proprietor, 

And  business,  relation  between,  1, 19^  •• 
Drawings  by   I.  100,  114 

Problems,  V.  93,  242 
Information  necessary  to,  I,  84 
Sales.  I.  209,  252.  253 
Proprietorship,  I,  18;  II.  IS 
Protesting  Notes.  I.  221,  298 
Punching  Machine.  II.  354 
Purchase,  (See  also  "Purchoaes,"  below) 
And  sales  records,  stock  broker's,  II,  440 

Form.  II.  420 
Elements  of  a.  II.  78 
Invoice  (See  "Invoice,  purchase") 
Journal  (See  "Journal,  purchase") 
Order  register.  II.  93.  94 
Orders  (See  "Orders,  purchase") 
Records.  II.  104-129 

Retail  organization.  II,  868-S70 

Voucher     system.     II.     116     (Ss«    a!so 
"Voucher  register") 
Register.  II,  392 

Requisition  (See  "Requisilio0,  purckaas") 
Specifications.  II.  70-8i 

Object  of.  II.  79 

SUndard.  advanlafea  of.  II,  iO.  SI 
System,  requirements  of,  II.  T? 


184 


GENERAL   INDEX 


Purchase  ftooK  ^ee  "Journal,  purchase") 
PuBCHASED  Division  of  Stores  Ledger,  II> 

139 
Purchases,  (See  also  "Purchase,"  above) 

Problem,  V,  93 
Account,  I,  200 

Analysis  of,  I,  403 

Closing,  I,  202,  203 
Forms,  I,  202,  203 

Operating  of,  I,  202 
Analysis  of,  II,  475 
Cash,  I,  113;  II,  122 
Departmental  distribution,  II,  475 
Discount  on,  not  deducted,  I,  97 
Material  (See  also  "Orders,  purchase,"  "Req- 
uisition, purchase") 

Placing  the  order,  II,  87 

Price  agreement,  II,  88 

Quotations,  new,  securing,  II,  88 
Rebates  and  allowances,  account,  analysis 

of,  I,  424 
Returned  (See  "Returns") 
Summary  of,  monthly,  II,  123 

Form,  II,  123 
Purchasing    Agent,   and   Stores   Keeper, 

Relation  between,  II,  82 
Purchasing   Department,   II,    76-103;   III» 

116,  124 
Activities  of,  II,  73-75 
Card  system,  use  of,  II,  87 
Cost  of  goods  sold,  II,  70 
£xi)enditures,    careful,    importance    of,    II, 

69,  70 
Expense,  II,  297,  298 
Filing  data,  II,  73 
Inspecting  material,  II,  74 
Invoices,  handling,  II,  74 
Issuing  material,  II,  74 
Loose-leaf  system,  use  of,  II,  87 
Order  record,  II,  77 
Orders,  purchase,  handling,  II,  74 
Organization,  II,  69-75 
Preparation  for  purchasing,  II,  76 
Price  information,  recording,  II,  76 
Prices,  determining,  II,  73 
Receiving  material,  II,  74 
Requisitions,  purchase,  handling  of,  II,  75 

(See  also  "Requisition,  purchase") 
Routine  of,  II,  76-95 
Small  vs.  large  business,  II,  72 
Storing  material,  II,  74 


Purchasing  Department — Continued 
Traffic,  directing,  II,  75 
Unscientific  purchasing  methods,  results  of, 
11,71 

Q 

Quotation  File,  II,  76,  77 
Quotations,  New,  Securing,  II,  88 


Rate  Card,  II,  304 

Rates,  Depreciation  (See  "Depreciation") 
Rates    of    Expense    Distribution    Oveu 
Product,  III,  42,  212,  271-285 
Adjustment  between  actual  and  applied  ex- 
pense, III,  212,  282-285,  295 
Flat  percentage  charge.  III,  284 
Reserve  account.  III,  283 
Machine-rate  method.   III,   272,   277,   279, 
287-298,  301-327  (See  also  "Machine-rate 
method") 
Material  cost  method.  III,  272,  281 
Percentage  of  labor  method.  III,  272-275 
Prime  cost  method.  III,  272,  281 
Process  system.  III,  271 
Productive-hour  method.  III,  272,  275-277 
Sold-hour  method.  III,  272,  279 
Ratio  Charts,  III,  406,  410-418;  IV,  399,  401. 

Forms,  III,  413,  418;  IV,  400 
Raw  Material  (See  "Material") 
Real  and  Personal  Accounts,  I,  58,  59 
Real  Estate,  (See  also  "Land") 
Mortgage,  I,  124,  125 

Bond  distinguished  from  corporate  bond, 
IV,  121 
Realization  and  Liquidation  Statement, 
I,  142-152 
Form,  I,  145 
Problems,  V,  78,  83,  266 
Assets, 

Realized,  I,  147,  148 
To  be  realized,  I,  146 
Cash  included  among  assets,  I,  147 
Credits,  supplementary,  I,  148 
Debits,  supplementary,  I,  149 
Form  of,  I,  143 

Information  required,  I,  143,  144 
Liabilities, 

Liquidated,  I,  148 
To  be  liquidated,  I.  147 
Unliquidated,  I,  149 
Preparatory  statements,  I,  143 


GENERAL  INDEX 


185 


Rebates  (See  "Allowances,"  "Discounts") 
Recapitulation, 
Record,  cash,  II,  211 

Form,  II,  211 
Sheet,  sales,  II,  172,  173 
Forms,  II,  174  ' 

Receipts, 
Cash, 
Arrangement  of  items,  order  of,  I,  109 
Deposit  of,  daily,  II,  192 
Register,  mail-order  house,  II,  893 

Form,  II,  394 
Statement  of,  I,  104-115 
Journal  entries,  I,  183 
Receivers, 

Problems,  V,  266,  271 
Appointment  of,  I,  142 
Balance  sheet,  I,  143,  149 

Form,  I,  151 
Cash  account,  I,  149 

Form,  I,  150 
Deficiency  statement,  I,  140,  141;  IV,  319- 
326 
Illustrative  examples,  I,  140;  IV,  329 
Duties  of,  I,  142 

Realization    and    liquidation   statement,   I, 
142-152  (See  also  "Realization  and  liq- 
uidation statement") 
Form,  I,  145 
Reports,  I,  143,  149 

Statement  of  affairs  (See  also  "Statement  of 
affairs")  I,  129-141;  IV,  319,  324 
Form,  I,  136,  137 
Receiving, 
Clerk,  duties  of,  II,  92,  134 
Material,  II,  74,  134-137 
Reconciliation  of  Cash  Book  with  Bank 
Balance,  I,  225-227;  IV,  425 
Problems,  V,  3,  4 
Record, 
Books  of  original   (See  "Books  of  aooount* 

original  entry") 
Capital  stock  transfer,  II,  336 

Form,  II,  337 
Pledge,  II,  341 
Form,  II,  341 
Recording  Business  Information,  I,  22,  2S 
Records, 
Arrangement  and  classification  of  items,  II, 

58 
Auxiliary,  II,  47,  48 


Rxcobda— Conh'n  usd 
Books  and.  for  braocliM  uhI  ehaim  i 
II.  880-388 
Forms.  II.  882-888 
Bound.  II.  61-08 
AdvanUges  of,  II,  61,  0« 
Disadvantages  of,  II,  M 
Cards,  II,  66,  67 

Advantages  of,  II.  67 
Cash  (Sec  "Cash  records") 
CJub.  II.  448  (See  also  "Clubs") 
Columnar,  advantages  of,  II,  tS.  \M   IM 

164 
Contractors,    building.    II,    458    (S*« 

"Contract,"  "Contractors,  building") 
Cost,  III,  29  (See  also  "Cost  acrounUBf ") 
Cost  sheets.  III.  80,  88,  76  (See  also  "Cost 

sheets."  "Ledger,  cost") 
Detail,  amount  of,  II,  55 
Development  of,  II,  25-81 
Estate,  II,  402,  409.  410 
Estimated  cost  system  (See  "Estimated  rast 

system") 
Expense,  indirect.  III,  224 
Form  of,  II,  52-58 
Adaptable   to   more   than   one   purpose, 

11,55 
Columns.  II.  57.  58 
Designing.  II,  56.  57 
How  determined.  II,  58 
Relation  of.  to  system.  II,  5fl-M 
Ruling.  II.  56-58 
Uniformity  of.  II,  54 
Grouping.  II.  36.  87 
Hotels  and  restaurants,  H.  486  (See  also 

"Hotels  and  restaurants") 
Income  tax.  II.  848 

Forms.  II.  846.  847 
Inventory  sheet.  III.  121 

Form.  Ill,  120 
Job  order  system.  Ill,  29 
Labor  (See  "Labor  records") 
list  of.  II.  85,  86 
Loose-leaf.  II.  60.  61.  64-M  (Se«  abo  **Lom». 

leaf  records") 
Mail-order  accounting.  II.  889,  890 
Manufacturing  enterprise.  II.  35.  808-314. 
463-465:  III.  165-194 
Form.  II.  464 
Mercantile    business    (Sec    'Traiiiac   Wii- 

ness") 
Primary  purpose  of,  1. 14 


186 


GENERAL   INDEX 


Records — Continued 

Process  cost  system  (See  "Process  cost  sys- 
tem") 
Production-center   system    (See    "Machine- 
rate  method") 
Purchase  (See  "Purchase  records") 
Reports  (See  "Reports") 
Retail  organization,  II,  34,  35,  365-372 
Sales  (See  "Sales  records") 
Special,  II,  33^348 

Forms,  II,  335,  337-339,  341,  343,  344, 
346,  347 
Spoiled  and  returned  goods,  II,  380 

Form,  II,  384 
Stock,  general,  II,  380 

Form,  II,  382 
Stores,  III,  115,  118-141  (See  also  "Stores") 
Subsidiary,  I,  328-337;  II,  47,  48 

Forms,  I,  330-333 
Summarization,  II,  247,  248 
Textile  costs  (See  "Textile  costs") 
Time  (See  "Time  records") 
Trading  business  (See  "Trading  business") 
Refunds,  (See  also  "Returns  and  allowances") 

For  overpayments,  I,  112 
Register, 

Automatic,  II,  356,  357 
Cash,  II,  177,  215,  358 

Disbursements,  mail-order  house,  II,  393 
Form,  II,  394 

Receipts  (See  "Cash  receipts  register") 
Check,  II,  209-211 

Form,  II,  208 
C.  O.  D.,  II,  391 

Form,  II,  391 
Commission    merchant's    consignment,    II, 

345,  348 
Contract,  II,  454 
Diamond,  II,  342 

Form,  II.  343 
Due  biU,  II,  369,  370 
Hotel  guest,  II,  436,  437 

Form,  II,  437 
Insurance,  II,  342,  345 

•Form,  II,  344 
Invoice,  II,  97 
Materials  ordered,  II,  86 
Notes, 

Payable,  I,  303;  II,  334 
Form,  II,  335 

Receivable.  I,  297,  303;  II,  334 
Form,  n,  335 


REGJBTEa-r-CorUinued 
Order,  II,  340,  341 

Form,  II,  339 
Purchase  order,  II,  93,  94,  392 
Rent,  II,  253 

Form,  II,  254 
Return  and  allowance,  II,  125 

Form,  II,  125 
Sales,  II,  157 
Securities,  II,  348 

Form,  II,  346 
Storage,  chain  stores,  II,  381 

Form,  II,  388 
Subcontract,  II,  454 

Voucher    (See    "Voucher,"    "Journal,    pur- 
chase") 
Registering  Stock,  II,  415 
Regulations,  Stock  Exchange,  II,  415 
Renewals  (See  "Repairs  and  renewals") 
Rent,  III,  98,  101,  233,  236;  IV,  14,  19,  21,  27 
(See  also  generally  "Fixed  charges") 
Account  illustrated.  III,  101 

Journal  entries,  III,  107;  IV,  21,  22 
Distribution  of  expense,  II,  471-473;  III,  107 

Production-center  system.  III,  289 
Register,  II,  253 
Form,  II,  254 
Rents   of  an  Annuity,  IV,   146    (See  also 

"Annuity") 
Repair  Shops,  Records  in.  III,  30 
Repairs  and  Renewals, 
Problems,  V,  15,  16,  18 
Accounting  covering,  I,  319-321 
Buildings,  improvements  to,  IV,  235-237 
Chargeable  to  capital,  when,  IV,  45-49,  61, 

97,  235-237 
Depreciation  and,  IV,  167 
Machinery,  III,  221  (See  also  general  sub- 
ject of  "Labor,  indirect") 
Production -center  system.  III,  291 
Standing  expense  orders.  III,  226 
Replacement  Order,  III,  146 
Replacements  (See  "Repairs  and  renewals") 
Reports,  (See  also  "Statements") 
Cash,  daily,  II,  227,  228 

Form,  II,  228 
Material  used.  III,  148 
Production  (See  "Production  reports") 
Time  (See  "Time  records") 
Requisition, 

Credit,  II,  141,  142 
Delivery,  II,  83 


GENERAL  INDEX 


187 


Requisition — Continued 

Material  (See  "Material  requisitiona**) 
Purchase,  II,  82-87 

Accuracy  of  content,  checking,  II,  83 

Colors,  different,  when  used,  II,  83 

Contents  of,  II,  85,  86. 

Copies,  number  of,  II,  85 

Defined,  II,  82 

Form  of,  II,  84 
Form,  II,  84 

Handling  of,  II,  73,  86,  87 

Materials  ordered  register,  II,  86 

Signing,  II,  87 
•Reserve     Fund,"  (See     also     "Reserves," 

below) 
Canadian  term  for  surplus,  IV,  95 
Compared  with  "reserve  account,"  IV,  106, 

107 
Reserves,  (See  also  "Funds") 

Problems,  V,  19,  21,  207,  271,  293, 319, 331 
Accounting  for,  IV,  101-103 
Accounts,  IV,  180 
Available,  when,  IV,  109 
Bad  debts,  IV,  105,  115,  216 
Problems,  V,  19,  21,  328 

Income  tax  requirements,  IV,  220 
Balance  sheet  treatment  of,  IV,  105 
Compared  with  funds,  IV,  107-111 
Contingent,  IV,  105 
Created  from  surplus,  IV,  104,  105 

Problem,  V,  207 
Damage  claims,  IV,  118 
Definition,  IV,  104 
Depreciation,  IV,  105 

Accounts,  IV,  181,  184,  187,  188 
Form,  IV,  183 

Amount  inadequate,  how  handled,  IV,  99 

Fixed  assets,  IV,  115 

Journal  entries,  illustrative,  IV,  184-187 

Revaluation  of  assets,  IV,  101 

Stock-in-trade,  IV,  115 
Disposition  of,  on  payment  of  bond  issue, 

IV,  161 
Equivalent  to  surplus,  in  Germany,  IV,  95 
Estimated  losses,  IV,  115 
For  expense  account,  III,  283 
For  extensions,  IV,  105 
Injuries  to  employees,  IV,  118 
Kinds  of.  IV,  104,  105,  114,  115 
Nature  of,  IV,  107 
"Necessary,"  IV,  114 
Presentation  on  balance  sheet,  IV,  284 


Reserves — Continiud 
Purpose  of,  IV,  104 
Relation  to  profit*.  IV,  6 
Secret.  IV,  111-114 
Problem,  V.  319 
Arguments  for  and  liffaiiut.  IV,  IIS 
How  created.  IV.  Ill 
Propriety  of,  IV.  112 
Shown  on  balance  ahcct.  IV,  «4 
Sinking  fund,  IV,   156  (Sc«  abo  '^Siakiaf 

fund") 
True,  IV,  104,  105,  114 
Entries  for.  IV.  115 
Factors  determining.  IV,  115 
Valuation.  IV.  104.  105.  114,  115.  117 
Accounting  for,  IV,  117,  118 
Shown  on  balance  sheet.  IV,  105 
Voluntary,  IV,  114 

Wasting  assets,  depletion  of,  IV,  115.  440 
"Rest."  English  Term  for  SiBPLts.  IV.  M 
Restaurants  (See  "Hotels  and  restaurants") 
Restraining    Trade,    Br    HoLoiNa    Com* 

PANIES,  IV,  333 
Retail  Organization,  II.  H&-150.  S6S-87t 
Advertising  department.  II,  149 
Branch  stores,  organizing,  II,  153-154 
Cash  accountability.  II,  366-368 
Classification  methods,  II.  268 
Cost  accounting  for  (See  "Costiiif  acrouBl- 

ing  for  trading  enterprise") 
Invoices, 

Purchase,  II,  369 

Sales,  II,  371 
Jobbing  combined  with,  II,  15t-154 
Journal,  II.  366 
Ledger.  II.  871.  372 
Mail  orders.  II.  149 
Profit  book.  II.  371 
Records,  II,  365 

Purchase,  II.  368-870 

Sales.  II.  370.  371 
Small,  II,  150 
Statements.  II,  366 

System  of  accounts  for,  problrm  of.  II.  M3 
Returns, 

Adjustment  of,  II.  tiS 
And  allowances. 

Analysis  sheet  of  allowaocM,  II,  IM 
Form.  II.  126 

Journal  entries.  I,  184 

Refund  ticket.  II.  iiS 
Form.  II.  ii6 


188 


GENERAL  INDEX 


Returns — Continued 

And  allowances — Continued 
Register,  II,  125 
Form,  II,  125 
Purchases,  I,  184,  238;  III,  1S9 
Account,  analysis  of,  I,  424 
Method  of  handling  entries,  I,  288 
Memorandum  of,  II,  123,  124 
Form,  II,  124 
Sales,  I,  210;  II,  175-177 
Form,  II,  176 
Account,  analysis  of,  I,  411 
Cash  memorandum  for,  II,  225 

Form,  II,  226 
Entering  in  journal,  I,  254 
Spoiled  and  returned  goods  record,  II,  880 
Form,  II,  381 
Stores,  III,  133 
Revenue, 

Estimate  of,  II,  320,  321 
Expenditures,    compared    with    capital   ex* 
penditures,  IV,  45-49,  61,  97,  235-237 
Room  Ticket,  Hotel,  II,  436,  437 

Form,  II,  437 
Rooms  Occupied,   Hotel,  Vebification  of 

Receipts  from,  II,  443 
RoPB  Making,  III,  50 
Routine, 

Automatic,  II,  49 
Completeness  of,  essential,  II,  54 
Office,  rules  for,  II,  49,  50 
Rowan  System,  Payment  of  Wages,  II,  305 
Royalties, 

Defined,  IV,  262 

Minimum  payment  per  year,  IV,  18,  263 
Paid  in  advance,  IV,  14 
Rules,  Office  Routine,  II,  49,  50 
Rulings  and  Columns,  II,  56-58  (See  also 
"Journal,  columnar") 


Salaries.    (See     also     "Labor,"     "Pay-roll,' 
"Wages") 
Partners',  I,  3il8,  350,  351 
Problem,  V,  42 
Sale  of  Partnership  Business,  I,  859-361 
Sales, 

Account,  I,  208 

Analysis  of,  I,  422 
Allowances  I,  99 
Analysis  of.  I.  160 


Sales — Continued 
Cash,  I,  110,  249-252 

Accounting  procedure,  I,  249-252;  II,  204 
Income  for  period,  I,  110 
Receipts  for,  duplicate,  II,  177 
Recording,  II,  163 
Charge,  I,  249 

C.  O.  D.,  I,  110-254;  II,  181-183 
Route  ledger,  II,  183 

Form,  II,  182 
Route  sheet,  II,  181 
Form,  II,  182 
Commission  on,  accounting  procedure  for, 

11,340,  341;  IV,  27 
Containers,  I,  253 
Cost  of,  II,  144 

Overhead  distribution  of,  II,  475 
Coupon  books,  use  of,  II,  187 
Deductions  from,  I,  95-97 
Department,  II,  146-155 

Advertising  department, relation  to,  11,154 
Functions  of,  II,  10,  147 
Jobbing  organizations,  II,  150,  151 
Organization  of,  II,  148 
Retail    and    jobbing    organization    com- 
bined, II,  152-154 
Retail  organization,  II,  148-150 
Traffic  department,  relation  to,  II,  15 1, 155 
Discounts,  I,  99 
Drivers',  II,  336,  338.  840 

Form,  II,  338 
Fixed  asset,  I,  112 
Impression  book,  II,  166,  167 
Instalment,  II,  185-187 
Form.  II,  185 
Problem,  V,  109 
Tickler  file,  II,  185 
Invoices,   II,    159-161   (See  also  "Invoices, 

sales") 
Journal  (See  "Journal,  sales") 
Ledger, 

Containers  column  in,  II,  185 

Form,  II,  184 
Special  form,  II,  256,  257 
Form,  II,  255 
Net, 

Problem,  V,  93 
Overhead  distribution  of,  II,  475 
On  approval,  II,  180,  181 
On  consignment,  II,  177-179 
Sales  book  for  consignee,  II,  180 
Form,  II,  176 


GENERAL   INDEX 


189 


Sales — Continiied 

On  credit,  records  of,  II,  163,  164 
Order  blanks,  II,  172 

Form,  II,  172 
Orders  (See  "Orders,  sales") 
Percentage  of  gross  profits  based  on,  IV, 

392-394 
Profit  on,  II,  365 
Problem,  V,  23 

Analysis  of,  II,  477 
Form,  II,  476 

Gross,  II,  475-477 
Ratio  to  selling  expense,  II,  299,  300 

Problem,  V,  341 
Rebates,  I,  99 
Rebates  and  allowances  account. 

Analysis  of,  I,  411 
Recapitulation,  II,  172,  173 

Forms,  II,  174 
Recording,  by  tabulating  machine,  I,  160 
Records,  II,  162-188 

Alternate  order  system,  II,  172 
Form,  II,  172 

Journal  (See  "Journal,  sales") 

Ledger  (See  subheading  "Ledger,"  above) 

Mechanical  account  system,  II,  173,  175 

Necessity  for,  II,  162,  163 

Retail  organization,  II,  370-371 
Register,  II,  157 
Returned  (See  "Returns") 
Schedule  of,  I,  160 
Sundry,  I,  249-252 
System,  alternate,  for  a  small  concern,  II,  172 

Form,  II,  172 
To  proprietor,  I,  209,  252,  253 
Sales  Book  (See  "Journal,  sales") 
Salesmen's  Commissions,  II,  340,  341 
Schedule,  (See  also  "Statements") 
Accounts  receivable,  I,  157,  158 
Capital  or  surplus  adjustments,  I,  159,  160 
Cost  of  goods  sold,  I,  161 
Depreciation,  III,  22 1.  234,  249,  253 
Form,  III,  250,  251 

Textile  costs.  III,  397.  398 
Expenses,  general,  L  162 
Fixed  charges.  Ill,  224,  233,  253 
Form,  III,  235 

Process  system.  III,  341 
Form,  III,  342 
Functions  of,  II.  288,  289 
Inventory,  I,  158 

Purposes  ajxd  uses  of»  1, 1^8, 150 


Schedule— Con/miMrf 
Investmenta,  I,  159 
Miscellaneouii,  I,  lOf 
Notes, 

Payable.  1.  157 
Receivable,  I,  157 
Sales,  I,  160 
Supporting,  I,  153-1 6S 
Desirable,  when,  I,  16S 
Example  of,  I,  155.  156 
Presentation,     interpretative,     prinripjr* 
and  method  of.  I,  I5S-I55,  169 
ScHEDiLiNa  Work    in   DEPARTUKjm,     Fott 

Even  Capacitt,  III.  6i 
Scrap,  I,  319,  320:  III,  147 

Problem.  V,  23S 
Scrip  Dividends  (See  "Dividend***) 
Secret  Reserves  (See  "Reserve*") 
Securities.  (See  also  "Bonds."  "Slock**) 
Account,  analysis  of,  I,  404 
Handled  on  the  exchange,  II,  415 
Register,  II,  348 
Form,  II,  346 
Schedule  of  investments.  1, 150 
Verification  of,  IV,  427 
Segregated  Budget,  II,  316 
Selling. 
Expense  (See  "Expense,  aelliaf '*) 
Price, 

Elements  of.  III,  25 

Form.  Ill,  25 
Fixing.  Ill,  5,  6 
Inventory  at,  II,  145 
Relation  to  production  coats.  II.  70;  III. 
5,  6 
Profitable,  factors  in.  II.  146 
Service  Departments  (See  *'Adiium«trativ« 
expense  "  "Power  plant  rtpenae"  **SliM«t 
department  expense") 
Service  Metuod.  Dcpretutiom  RAxai.  IV, 

172 
Service.  SpeciaLi,  Distmibution  or  ExroMl 

or.  II,  460 
Services  Expcmbc,  IV,  «7 
Sheets, 
Cost  (See  "Cott  sbceU**) 
Dxpenae    distribution    (Se*   "ExprtM*   db- 
tribution  sheet") 
Sherman  Anti-Tmust  L4W  or  1880.  IV,  SS» 
Shipduiloino     T«aok,     AjmciFAnoii     or 
PnoriTa.  IV.  36 


190 


GENERAL  INDEX 


Shipments, 

Between  branches,  II,  877 
On  order,  II,  94,  95 
Shipping, 
Department, 

Account  illustrated,  textile  costs,  HI,  393 
Checking  goods  in,  II,  160 
Expense, 

Chart,  graphic,  III,  417 
Form,  III,  418 
Tickets,  n,  159,  160 
Shoe  Factory, 

Day's  work  sheet.  III,  62 
Estimated  cost  of  material.  III,  149 
Estimated  costs  in,  III,  63 
Shoe  tag,  III,  58 
Form,  III,  59,  60 
"Short"  Account  (See  "Stock  brokerage") 
Single-Entry    Bookkeeping     (See    "Book- 
keeping, single-entry") 
Sinking  Fund,  IV,  143-164 

Problems,    IV,    162,    163;    V,    152,    160, 
207,  300 
Account,  analysis  of,  I,  410 
Accounting  procedure,  IV,  155-163 
Adjusting  entries,  IV,  160 
Disposition    of    fund    after    payment    of 

debt,  IV,  161 
Expenses,  IV,  158 
Income,  IV,  158 
Investments,  IV,  9,  10,  157 
Payments  into  fund,  IV,  156 
Redemption  of  debt,  IV,  159 
Sinking  fund  reserve,  IV,  156 
Amortization  of  debt,  compared  with  sink- 
ing fund  method  of  payment,  IV,  153,  154 
Annuity    method,    IV,    144-154    (See   also 
"Annuity") 
Computing,  IV,  144-148 
Future  worth  of  annuity,  IV,  146, 151, 153 
Present  worth  of  annuity,  IV,   148-151, 
153 
Compound  interest   method  of  calculating 

depreciation,  IV,  175-177 
Creating,  methods  of,  IV,  144 

Problem,  V,  207 
Debt,  redemption  of,  IV,  144,  151-154,  159 
Defined,  IV,  143 
Disposition  of,  IV,  161 

Entries,  IV,  161 
Expenses,  due  to,  IV,  158 
Income  derived  from,  IV,  158 


Sinking  Fund — Continued 
Investments,  IV,  9,  10,  157 

Entries,  IV,  158 
Methods  of  creating,  IV,  144 
Payments  into,  IV,  156 
Purpose  of,  IV,  143 
Reserve,  IV,  156 

Problem,  V,  300 
Account,  analysis  of,  I,  420 
Trust  deed,  provisions  of,  IV,  155,  157 
Trustee,  report  of,  IV,  157 
Sinking     Fund      Method,      Depreciation 

Rates,  I,  324,  325;  IV,  175-177 
Six-Column  Journal,  II,  241 

Form,  II,  242 
Slide  Rule,  II,  355 
Soap  Factory,  By-Products,'  III,  148 
Sold  Division  of  Stores  Ledger,  II,  141 
SoLD-HouR  Method   of   Distributing   Ex- 
pense Over  Product,  III,  272,  279 
Problem,  V,  386 
Sole  Proprietorship,  I,  18;  II,  13  (See  also 

"Proprietor") 
Sorting  Machine,  II,  355 
Source  File,  II,  77 
Specifications,  Standard,  Advantages  of, 

II,  80,  81 
Spinning  Mill,  III,   46   (See  also   "Textile 
costs") 
Problems,  V,  351,  353,  355,  357 
Weekly  production  report.  III,  44,  45 
Form,  III,  45 
Spoilage  of  Material,  III,  146 
Spoiled  and  Returned  Goods  Record,  II, 
380 
Form,  II,  384 
Stamp  Affixer,  II,  357 
Standing   Expense   Orders,    III,    31,    224, 
226-232 
Classification,  III,  227,  229-232 
Distribution,  III,  224 

Sub-departments,  III,  266 
Numbering,  III,  229 
List  of.  III,  227,  229 
Form,  III,  230 
Time  tickets.  III,  227 
Form,  III,  228 
Statement  of  Affairs,  I,  129-141;  IV,  319, 
324 
Form,  I,  136,  137 
Problems,  V,  61,  66,  70 


GENERAL  INDEX 


101 


Statement  of  ArPAiRS — Continued 

Assets,  valuing  and  stating,  I,  132 
Problems,  V,  66,  70 

Deficiency  statement,  I,  140,  141;  IV,  819- 
326 
Problems,  V,  61,  66,  70 
Illustrative  examples,  I,  140;  IV,  329 

Example  of,  I,  136-140 

Form  of,  I,  141 

Illustrative  example,  IV,  327-329 

Information  required,  I,  135,  136 

Liabilities,  stating,  I,  133 

Treatment  of,  I,  138-140 
Statement  of  Condition,  I,  385-387 
Form,  I.  387 

Comparative,  I,  387-389 
Form,  I,  388 

Form  of,  I,  386 
Statement  Voucher,  II,  121 
Statements,  (See  also  "Balance  sheet") 

Account  form,  I,  117;  II,  290;  IV,  285 

Articulation,  IV,  413  * 

Assets  and  liabilities,  I,  46-49 
Forms,  I,  46-49 
Problem,  V,  336 
Summary  of  changes  of,  I,  389 

Balancing,  I,  49 

Bank,  form  of,  I,  224,  225 
Form,  I,  224 

Basic,  II,  289 

Cash  discount,  treatment  of,  I,  280,  281 

Comparative,  II,  294 

Contents  of,  I,  25 

Deficiency  (See  "Statement  of  affairs") 

Defined,  I,  25 

Designing, 

Importance  of,  II,  287,  288 
Time  of,  II,  288 

Exhibits,  schedules,  and,  II,  288,  289 

Expenses,  production-center  system.  III,  308 
Form,  III,  307 

Form  and  arrangement  of,  I,  26 

Income, 

Consolidated,  IV,  364-366 
Tie-up  with  balance  sheet,  IV,  292 
Problems,  V,  132,  221,  336 

Manufacturing  business  (See  "Manufactur- 
ing enterprise") 

Mercantile   business    (See   "Trading  busi- 
ness") 

Of  going  business,  I,  47-49 
Form,  I,  48,  49 


Statcmsnts— ConiiniMJ 
Pay-roU  (See  'Tay-rolT*) 
Percentage.  u«e  of,  II.  «M.  AM 
Preparation  of.  I.  885;  IV,  10.  II 
Problem.  V.  28 

ClaasificatioD  of  accotuta.  aid  to.  I«  il( 
n,  284-:«8« 
PresentatJon.  interpretive,  I,  t»  lit 

Method  of,  I.  155 

Principles  of.  I.  154.  168 
Profit  and  loss  (See  "Profit  and  Iims  i 

ment") 
Purpose  and  use  of,  I.  25.  154 
Realization  and  liquidation  (See  ** 

tion  and  liquidation  statement") 
Receipts  and  payments,  cash,  I.  lOf-115 
Form.  I.  106 

Dates  of.  I.  107 

Details  included.  I.  108 

Form  and  content  of.  I.  105 

Items,  arrangement  of,  I,  100 

Items  not  disclosed,  I.  114 

Profit  and  loss  not  disclosed  by,  h  1*i>  lU 

Purpose  and  use  of,  I,  104,  115 

Title  of,  I.  106,  107 
Report  form,  I,  117;  II.  201;  IV,  tSt 
Retail  organization.  II,  8M 
Schedules,  exhibits,  and,  II,  tM,  t8t 
SuUsUcal.  III.  405.  414 
Time  periods  covered  by,  11,  fOl,  ftt 

Monthly.  II,  292;  UI.  28 

Weekly.  II.  292 

Yearly.  II,  291 
Units  used  in,  II.  298 
Statistical  Ckabts  (See  "Charts.  grapWen 
Statistics, 

Comparison  of.  II.  f08. 104;  IV.  800-401 

Form.  IV,  400 
Cumulation  of,  II,  tM^  tif 
Steel  Industbt.  CnAnoM  Aftuid  to  Eaw 

Matsbial,  UI.  150 
Stock.  III.  40  (See  also  "MaterUl"  "S^mrnD 
Index  card  for  auul-octlsr  necowMini.  tU 

890 
Ledger  (finished  foods).  III.  77 

Form.  III.  78. 
List.  III.  185.  804 

Forms.  III.  185.  804 
Record,  general.  II.  ••• 

Form,  II«88t 


192 


GENERAL   INDEX 


Stock — Continued 

Turnover,  I,  210,  211;  IV,  395-397 

Calculating,  I,  211;  IV,  397 
Problem,  V,  341 

Defined,  IV,  395 
Stock  Brokerage,  II,  415-431 
Accounting, 

Records,  II,  419,  420 

Status  of,  II,  415 
Balance  sheet,  II,  428-431 
Blotter,  II.  420-423 

Forms,  II,  421 
Clearance  sheet,  II,  417 
Form,  II,  418 

Time  of  delivery,  II,  417 
Clearing  house  ticket,  II,  416 
Exchange  memberships,  II,  429 
Fee,  II,  423 
Inventories,  II,  427 
"Long,"  II,  423-425 

Account,  II,  424,  425 
Margin  deposit,  II,  423 
Profit  and  loss  account,  II,  431 
Purchase  and  sales  records,  II,  420 

Form,  II,  420 
Securities, 

Disposition  of,  II,  427 

Handled  on  the  exchange,  II,  415 

Inventory  of,  II,  427 
"Short,"  II,  423,  425-427 

Account,  II,  426,  427 

Borrowing  stocks,  II,  425 

Delivery,  clearing  house  procedure,  II,  425 

Interest  paid  borrower  of  stocks,  II,  426 
Stock  exchange  clearing  house,  IT,  410,  417 
Trading  on  the  exchange,  II,  413 
Stock,  Capital, 
Accounting  for. 

Different  kinds,  IV,  196 

Issues,  actual,  IV,  190 

Problems,  V,  170,  173,  176 

Nature  of  problem,  IV,  8,  9 

Total  authorized  issue,  IV,  192-194 
Problem.  V,  176 
Accounts, 

Analysis  of,  I.  422 

Purpose  of.  IV,  189 
Acquired  from  other  CMporations.  IV,  19, 
334 

For  purposes  of  control,  IV,  335 

For  purposes  of  investment,  IV,  334 

Illegal,  when,  IV,  331 


Stock,  Capital — Continued 

Acquired  from  other  (.-orporations — Contin- 
ued 

Not  illegal,  IV,  334 

Statutes  allowing,  IV,  333 
Bank,  IV.  200 
Bonus,  IV,  209 

Certificates,  I,  364,  365;  II,  415 
Closing  transfer  books,  IV,  63,  64 
Common,  I,  366 

Problem,  V,  60 
Discount  on,  IV,  9,  199 

Accounting  for,  IV,  200 

Not  allowable  in  State  of  New  York,  IV. 
199 
Dividends  (See  "Dividends") 
Dividing  into  shares,  I,  364,  365 
Donated,  I,  372,  373 

Problems,  V,  173,  176,  277 
Exchange  (See  "Stock  brokerage") 
Exchanged  between  corporations,  IV,  339 
Forfeited,  IV,  210 

Surplus  from,  IV,  211 
Instalment  account,  analysis  of,  I,  406 
Ledger.  II,  261,  262 

Form,  II,  258 
Owned,  account,  analysis  of,  I,  404 
Owned  for  purposes  of  control,  IV,  335 
Owned  for  purposes  of  investment,  IV,  334 
Ownership,  forms  of,  IV,  334 
Payment  for,  by  instalment,  IV,  194 
Preferred,  I,  366,  367;  IV,  65 
Premium, 

Account,  analysis  of.  I.  424 

Accounting  for.  IV.  199 

As  good-will,  IV,  361 

Disposition  of,  IV.  199 

Method  of  treating,  IV,  9 

Surplus  of  subsidiary,  IV,  358,  361 
Problem,  V,  312 
Registering,  II,  415 
Schedule  of  investments,  I,  159 
Stock  book,  II,  336 

Form,  II,  337 
Subscribed,  account,  analysis  of,  I,  418 
Subscriptions. 

Problems.  V,  59,  152,  170 

Account,  analysis  of,  1,  405 

Di\ndends  applied  to,  IV,  87 

Paid  subsequently  or  in  instalments,  I,  369 
Transfer  record,  II,  338 

Form,  II,  337 


GENERAL  INDEX 


103 


Stock,  Capital — Continued 

Treasury,  I.  371-373;  IV,  201-208 
Account,  analysis  of,  I,  406 
Accounting  for,  IV,  202-205 

Problem,  V,  277 
Balance  sheet  treatment,  IV,  208 

Problem,  V,  152,  277 
Defined,  IV,  201 
Purchase,  above  par,  IV,  207 
Purchase  below  par,  IV,  200 
Purchases,  IV,  205 
Surplus  account,  analysis  of^  I,  421 
Problems,  V,  173,  176 
Trust  company,  IV,  200 
Without  par  value,  IV,  200 

Balance  sheet  reference  to,  IV,  201 
Entries,  IV,  201 
Stock-in-Trade, 
Defined,  IV,  215 
Depreciation  on,  IV,  223,  224 

Reserve  for,  IV,  115  (See  also  "Reserves") 
Overhead  applicable  to,  IV,  227 
Stockholders, 

Corporate  control,  II,  18 
Estates,  IV,  69 
Married  women,  IV,  68 
Notice  of  dividends,  IV,  69 
Of  record,  IV,  66 
Pledgees,  IV,  68 
Straight-Line  Method,  Depreciation 

Rates,  IV,  171 
Storage  Register,  Chain  Stores,  II,  381 

Form,  II,  388 
Stores,  (See  also  "Material,"  "Supplies") 
Account, 

Illustrated,  III,  83 
Journal  entries,  illustrated,  III,  106 
Accounting,  II,  137-145;  III.  122-141 
Accuracy  essential.  III,  123 
Adjustments,  III,  139 
Arrangement,  III,  117 
Bill  of  material,  III,  135 

Form,  III,  135 
Bin  tag.  III,  132 
Form,  III,  133 
By-products,  III,  147 
Card,  II,  139 

Form,  II,  140 
Charging,  II,  462;  III.  150 
Classification,  III.  122.  138,  153-16* 
Advantages.  Ill,  154 
Basis  for  system  used,  Ili,  160 


Sron  M—Contin  utd 

Classification — ConHnutd 
"Block"  tyctem.  III.  IM 
Catalogue.  III.  101 
Combination  of  letter*  and  nualiera.  III. 

155.  160 
Dewey  decimal  •>'stein.  III.  \M 
Letter  system.  HI.  155.  159 
Mnemonic  system.  III.  159 
Numerical  system.  III.  1A5 
Symbols  used.  Ill,  154 
Control,  factors  in.  II.  ISS.  1S4 
Controlling  account.  III.  81,  \ti 
Defective  work.  Ill,  14« 
Defined.  II.  131,  13«;  III,  23.  llS 
Department. 
Control  centralized.  II,  ISl 
Development  of.  II,  1S£ 
Functions  of.  II.  74 
Separate,  II.  131 
Uniformity  in,  II.  \Si 
Department  expense.  III.  98.  104  (Sc«  ako 
generally      "Non-productive     dtpart* 
ments") 
Account.  III.  217 
Account     illustrated.     produrtioB-«Mil«r 

system.  III.  321 
Applied  direct  to  material.  III,  MS,  €97. 

302 
On  distnhution  sheet.  III.  MO.  M4 
Sub-departments.  III.  2W 
Estimated  quantity.  III.  149 
Expense,  incurred  before  reiTipt,  III.  IJO 
Finished  parts.  III.  24.  07,  80 
Fluctuations  in  weight  or  volume.  III.  141 
Hotel.  II.  442 

Inventory  (See  "Inventory") 
Issuance  of.  II.  Ill:  III.  131-lSS 
Issued  book.  III.  131.  ISO 
Form.  III.  137 
Control  of.  III.  131 
Posting  to  general  ledjcrr.  III.  IM 
Requisitions  summariicd  in.  III.  ISl.  IM 
Keeper.  III.  118 
Ledger  (See  "Ledgrr.  ftofm") 
Maximum.  II.  ISS 
Minimum.  II.  1S<.  ISS 
Organization.  II.  ISO.  ISl 
Prices,  III.  lis.  1« 
Estimated,  shoe  fatiory.  111.  lit 
Fluctuations  in.  III.  I4< 
Purchase  order  (See  "iXTtlcr*.  pvnkmm") 


194 


GENERAL  INDEX 


SronEa— Continued 

Purchasing    department    (See    "Purchasing 

department") 
Received  book,  III,  124 
Form,  III,  125 
Agreement  with  purchase  journal.  III,  ISO 
Posting  to  stores  ledger.  III,  126,  130 
Received  report,  II,  134-136 

Forms,  II,  135,  136 
Record  on  cost  sheets.  III,  131 

Proof  of.  III,  132 
Records,  II,  137-145;  HI,  115,  118-141 
Requisitions  (See  "Material  requisitions") 
Retail,  organizing,  II,  153,  154 
Returned,  III,  138 
Scrap,  I,  319,  320;  III,  147 
Shrinkage,  adjustment  on  books.  III,  140 
Spoilage.  Ill,  146 
Supplies  (See  "Supplies") 
Systems,  II,  130-145 

Planning,  factors  to  be  considered  in,  II, 
130 
Used,  report  of.  III,  148 
Waste,  III,  142,  145 

Adjustment  on  books.  III,  140 
Before  use  of  stores,  III,  150 
Stores-Keeper, 

Accountability,  II,  137 

And  purchasing  agent,  relations  between 

11,82 
Duties  of,  II.  134 
Stobino  Material  (See  "Stores") 
Straight-Line    Method    of    Calculating 
Rates,  I,  322 
Problems,  V,  16,  18,  168 
Subcontract  (See  "Contract") 
Subcontractors,    II,    453    (See   also    "Con- 
tractors, building") 
Sub-Departments, 

Non-productive,  II,  10,  12;  III,  265-268 
Productive  (machine  groups).  III,  278,  287, 
301   (See  also  "Machine-rate  method  of 
distributing  expense  over  product") 
Subscriptions, 

Special,  club,  II,  452 
Stock  (See  "Stock") 
Subsidiary, 

Departments  (See  "Sub-departments") 
Journal  (See  "Journal,  subsidiary") 
Ledgers  (See  "Ledger") 
Records.  I.  328-337;  II,  47,  48 
Forms,  I,  330-333 


Subsidiaries  (See  "Corporation,  subsidiaries") 
Summarization,  Records  or,  II,  247 
Summary, 

Analysis  of  sales,  IV,  317 
Cost,  cost  ledger,  process  cost  system,  III, 
347 
Form,  in,  348 
Daily  work  sheet.  III,  62 
Journal  entries,  I,  237 
Production, 
Daily,  UI,  337 

Form.  Ill,  338 

Monthly,  III.  336 

Form.  III.  337 

Weekly,  III,  44 

Form,  III,  45 

Purchases,  II,  123 

Form.  II,  123 
Time  tickets,  III,  171,  173,  177 
Sundry  Expense  Account,  III,  291.  322 
Supervision,  Accounting  System,  II.  50 
Supplies,  II,  74,  141,  469;  III,  17,  213,  217, 
221,  226-232 
Account,  III,  81,  122 

Journal  entries,  illustrated,  III,  106 
Process  cost  system,  III,  88 
Charged  direct,  unusual  method.  III,  222 
Department  expense,  distribution  of,  II,  469 
Included  in  term  "stores,"  III,  23 
Issuing,  II,  74,  141 

Not  exhausted  (See  "Deferred  debits") 
Office,  account,  analysis  of.  I,  408 
Posting  from  stores  issued  book.  III,  138 
Production-center  system,  III,  291 

Account  illustrated.  III,  325 
Requisitions  (See  "Material  requisitions") 
Standing  expense  orders.  III,  224.  226-232 
Form,  m,  230 
Surplus, 
Account, 

Problems,  V,  137,  173,  176,  277 
Analysis  of,  I,  421 
Compared  with  undivided  profits  account, 

IV,  97,  98 
Entries  to,  IV,  98 
Accounting  for,  IV,  101-103 

Effect  of  entries  on  balance  sheet,  IV,  102 
Adjustments,  I,  159;  IV.  95-103 

Problems.  V,  15,  16,  18,  21,  125,  132, 
148,  180,  266,  271,  284,  312 
Schedule  of,  I,  159,  160 


GENERAL  INDEX 


IM 


Surplus — Continued 
Bank, 

At  organization,  IV,  96 

Provision  for,  IV,  200 
Definition,  IV,  95 

Dividends  declared  froin,  IV,  55-59 
Forfeited  stock,  payments  on,  IV,  211 
Nature  and  sources,  IV,  95-103 
Reserve  from,  IV,  104,  105  (See  also  "Re- 
serves") 

Advisability  of,  IV,  60 

Factors  determining,  IV,  115 
Revaluation  of  assets,  IV,  100 
Sale  of  assets,  IV,  99 
Sources  of,  IV,  96 

Items  other  than  realized  profits,  IV,  95 
Special  accounts,  IV,  51,  96 
Specially    created    on    organization    of    an 

enterprise,  IV,  96 
Subsidiary  (See  "Corporation,  subsidiaries") 
Unearned,  special  account  for,  IV,  51 
Suspense  Accounts,  IV,  22,  27 
Systems,  Accounting,  (See  also  these  head- 
ings throughout  index) 
Agencies,  II,  373,  374 
Branches,  II,  374-388 
Chain  stores,  II,  374-388 
Clubs,  II,  446-452 
Contractors,  building,  II,  453-460 
Cost  accounting,  II,  461-477;  III,  801-400 
Estates,  II,  404-414 
Hotels  and  restaurants,  II,  432-445 
Mail-order  business,  II,  389-395 
Manufacturing  enterprise,  II,  461-465 
Professions,  II,  396-403 
Retail  business,  II,  363-372 
Stock  brokerage,  II,  415-431 
Stores,  II,  130-145 
Trading    enterprise,    cost    accounting,    II, 

466-477 
Wholesale  business,  II,  363-372 
Suspense  Account,  IV,  22,  27 

Problem,  V,  137 

T 

Table  D'hote  Dining  Room,  II,  43S 

Tabular  Ledgers,  II,  251 

Tabulating  Machines,  Operation  of,  II, 

353-355 
Tasx  System  of  Wage  Payment,  III,  204 
Tax,  Income  (See  "Income  tax") 


Taxes  ExractB.  Ilf.  M.  100.  fit.  ftl.  tM; 
IV.  29  (See  alao  geoeraUy  *'FbW  dwfv  *) 

Account,  analyitfl  o(.  I.  410.  417 
Account,  illustrated. 

Textile  cotU.  III.  SM 
Journal  entry,  illustrated.  III.  107 
Production <enter  system.  UI,  <90 
Taylob  Systkm,  PATMDrr  or  Waovk  II*  310 
Telephone  Expxnbb.  11.  468;  III.  tlS.  flti 

(See  also  "Fixed  chargct") 
Textile  Costs.  III.  4S.  01 .  S09-401 

Problems,  V.  847.  851,  888.  SM.  887 
Analysis  sheets. 

Cost  of  cloth  knit,  HI.  887.  888 
Cost  of  cloth  woven.  HI.  881. 884. 888 
Cost  of  mixes.  III,  872.  378 
Cost  of  yam  carded  and  spoa.  III«  878. 878 
Finished  cloth.  III.  887.  890 
Conversion  cost  distributed  uvrr  jrsni  casl« 

III,  378 
Depreciation  schedule.  III.  897.  888 
Dyeing  and  finishing.  III.  806 
Expense  accounts,  indirect.  III.  867.  SS9-8^ 
Boarding  house.  III,  896 
Building  expense.  III.  895 
"General  expense."  Ill,  896 
Insurance.  Ill,  399 
Light,  heat,  and  power.  III.  394 
Office  expense.  Ill,  397 
Taxes,  III.  399 
Finished  cloth  account.  III.  891.  80t 
Fluctuations  in  weight  and  ^-olums  ol  i 

rial.  III.  144 
Knitting  process.  III.  864 
Non-productive  departments.  III.  366 

Accounts.  III.  393-399 
Operating  department*.  Ill,  866 
Pay-roll  account.  III.  400 
Raw  material  account.  111.  86T 
Shipping  expense  account.  III.  888 
Spinning,  III.  46,  47 

Production  report,  weekly.  III,  44.  48 
Form.  111.  45 
Waste  account.  III.  867 
Weaving  process.  III.  364 
Work  in  process  accounts. 
Dye  house.  III.  369.  870 
Knitting.  III.  385.  386 
Mixes.  111.  369.  371 
Weaving.  III.  380-888 
Wet  and  dry  fi.iiskinf .  111.  887.  888 


196 


GENERAL   INDEX 


Textile  Costs — Continued 

^Vork  in  process  accounts — Continued 

Yarn,  III,  374-376 
Yarn  spinning.  III,  46,  47,  364 
Theory  of  Averages,  IV,  20,  26 
Three-Column  Journal,  II,     105,  164,  165, 
237-239 
Forms,  II,  106,  164,  238 
Ticket,  Hotel  Room,  II,  436,  437 

Form,  II,  437 
Tickets,  TiifE  (See  under  "Time  records") 
Tie-Up  Between  Statements,  IV,  292 

Problems,  V,  78,  132,  221,  336 
Time, 

Basis  of  wage  payment,  II,  305;  III,  169 
Cards, 

Mechanical,  II,  306-309;  III»  167, 168, 176 

Form,  III,  181 
Non-mechanical,  II,  313,  398,  399;  III. 
29,  35,  167-182,  331 
Forms,  II,  398;  III,  35,  178,  180 
Clock,  II,  307-309,  358;  III,  176,  179 
"In  and  out,"  II,  307,  308;  III,  167, 168,  176 
Time  Records, 

Pay-roll  (See  "Pay-roll") 
Production-center  system.  III,  306 
Time  clock  card,  ll,  306-309;  III,  167,  168, 
176 
Form,  III,  181 
Time  sheets,  II,  310,  311;  III,  175,  182 

Form,  III,  183 
Time  tickets,  II,  313,  398,  399,  462;  III,  29. 
35,  167-182,  331 
Forms,  II,  398;  III,  35,  178,  180 
Checking  accuracy  of.  III,  169,  173 
Lost  time.  III,  175 
Piece-work,  III,  170-184 

Forms,  III,  184,  186 
Piece-work,  coupons.  III,  185 

Form,  III,  186 
Standing  order.  III,  227 

Form,  III,  228 
Summary,  lU,  171,  173,  177 
Tools,  Expense, 

Production-center  system,  III,  291 
Account  illustrated.  III,  322 
Total  Cost,  Elements  of,  III,  16,  25 
Towne  Plan,  Payment  of  Wages,  II,  305 
Trade, 

Acceptances,  I,  304,  305 
Discounts  (See  "Discounts") 


Trade-Marks, 
Defined,  IV,  260 

Relation  to  good-will  and  patents,  IV,  260 
Trade  Secrets,  IV,  261 
Trading  Account,  I,  203,  204 

Problems,  V,  23,  83 
Trading  Business,  (See  also  "Retail  organiza- 
tion, "Wholesale  business") 
Budget  for,  illustrated,  II,  327-333 
Cash  book,  general,  II,  201-204 

Form,  II,  203 
Cost  accounting  for,  II,  466-477;  III,  24, 
25,    74    CSee   also    "Cost   accounting   for 
trading  enterprise") 
Records,  II,  34,  35,  365-372 
Statements,  IV,  310-318 

Illustrative,  II,  476;  IV,  311-318 

Problems,  V,  242,  249,  253 
Trading  account,  I,  203,  204 
Stores  accountability,  II,  141,  142 
Trading  on  the  Stock  Exchange,  II,  416 

(See  also  "Stock  brokerage") 
Traffic, 

Department,  11,  154, 

Relation  to  sales  department,  II,  154,  155 
Directing,  II,  75 
Transfers  Between  Banks,  I,  228,  229 
Traveling  Expenses,  IV,  27 
Treasury  Stock  (See  under  "Stock,  capital") 
Trial  Balance,  I,  71-77,  127 
Form,  I,  336 
Problems,  V,  45,  119,  137,  304,  319,  336, 
343 
Errors, 

Problems,  V,  137,  319,  343 
Controlling  accounts,  I,  261 
Locating,  I,  73 
Illustrative,  I,  74-77 
Limitations  of,  I,  73 
Method  of  showing  balances,  I,  72,  73 
Monthly,  I,  268 
Post-closing,  I,  127,  123 
Form,  I,  90 
Problem,  V,  45 
Analysis  of,  I,  400 
Preparation,  methods  of,  I,  71 
Preparation  of  balance  sheet  not  obviated 

by,  I,  127,  128 
Purpose  and  use  of,  I,  71,  72,  73 
Repetitions,  avoiding,  I,  72  - 
Trust  Companies,  Investments  in  Stocks 
OF  OTHER  Corporations,  IV,  334 


GENERAL  INDEX 


107 


Trust  Deed  Securing  Bond  Issue,  Provi- 
sions OF,  IV,  155,  157 
Trustees,  (See  also  "Receivers") 
Problems,  V,  78,  83 
Deficiency  statement,  I,  140,  141;  IV,  Sl»- 
326 
Problems,  V,  61,  66,  70 
Illustrative  examples,  I,  140;  IV.  329 
Estate  of  deceased  person,  II,  404   (See  also 

"Estate  accounting") 
In  bankruptcy,  IV,  319,  322 
Accounts  and  reports,  IV,  322 
Appointment  and  duties,  IV,  319 
Sinking  fund,  IV,  157 

Statement  of  affairs,  1, 129-141;  IV,  319,  324 
(See  also  "Statement  of  affairs") 
Form,  I,  136,  137 
Trusts,  (See  also  "Holding  company") 
Clayton  Act,  IV,  333 
Development  of,  IV,  331 
Sherman  Anti-Trust  Law,  IV,  333 
Turnover,  I,  210,  211 

Calculating,  I,  211;  IV,  397 

Problem,  V,  341 
Defined,  IV,  395 
How  stated,  IV,  396 
Twine  Factory,  III,  42,  91 
Two-Column  Journal,  II,  236,  237 

Form,  II,  237 
Typewriter,  II,  356 

U 

Undervaluation,  IV,  41,  42 

Underwear  Factory,  III,  187 
Form,  III,  188 

Undivided  Profits  (See  "Surplus") 

Unearned  Surplus,  IV,  51 

Uniform  Cost  System,  III,  12 

Unit  Cost  of  Product  or  Service,  III,  47 
Problems,  V,  353,  367 

United  States  Supreme  Court,  Profits 
Out  of  Wuich  Dividends  May  Be  De- 
clared, Defined,  IV,  58 

UxiTS  Used  in  Statements,  II,  293 

Universal  System  of  Numberino  Accounts, 
II,  271,  277-279 

Up-Keep  of  Buildings  (See  "Building  ex- 
pense") 

V 

Valuation,  (See  also  "Profits,  determination 
of") 
Accounts,  IV,  101 


Valuation — Continued 
Accounti  receivabU,  IV,  tl8 

Problem,  V,  70 
A«mU,  IV,  7,  A\-46.  198,  tl»-tM 

Innolvency  or  bankrui^Ujr,  1,  191.  IMe 
IV,  82« 
Basis  of.  IV,  44.  45 
Bonds,  IV.  W4-U9 

Investment  value  method.  IV.  IM-IM 
Copyrights,  IV.  ««1 
Effect  of  depreciation  on,  IV,  49 
Fluctuations,  method  of  rccordiag.  IT,  7 
Franchises,  IV,  265 
Good-will.  IV.  25S-i57 

Problems,  V.  183.  186.  187.  IM.  «M. 
277.  288.  312.  928 

Advertising,  IV,  251 
Inventory,  I,   123;  IV,  S2WM3  (Sc«  aOm 
"Inventory") 

Fire  loss  adjustment.  IV.  27< 
Kinds  of,  IV,  42.  43 
Land.  IV.  231.  234 
PatenU,  IV,  257-261 
Reserve,  IV.  104.  105.  114.  115.  117  (8m 

also  "Reserves") 
Royalties.  IV.  262.  263 
Sources  of  data  for.  IV,  45 
Trade-marks,  IV.  260 
Trade  secrets.  IV.  261 
Verification.  IV.  377-44« 
Account.  IV.  418 
Accounts  receivable.  IV,  4W 
Assets  and  liabilities,  IV,  417-4« 

Existence  of.  IV.  418-421 
Assets,  fixed,  IV.  428 
Bank  balance.  IV.  425 

Problems.  V.  3,  4 
Cash. 

Balance.  I,  225-227 
Problem.  V.  4 

In  hand.  IV,  422 

Payments.  IV,  425-425 

Receipts.  IV.  422 
Controlling  accounts.  baUnce,  I.  §44 

Problem.  V.  11 
Facts  vs.  opinion*.  IV.  417 
Fundamental  »tei».  IV.  417 
Importance  of.  IV.  417 
Inventories.  IV,  426 

Problems.  V.  127.  130.  SSI.  SSi 
Ledger  account.  IV.  418 
Note*  rtceivable.  IV.  4«e 


198 


GENERAL  INDEX 


/ 


VEBiricATiON — Continued 
Securities,  IV,  427 
Trial  balance,  IV,  405-410 
Problem.  V,  343 
Voucher, 

Canceled  checks,  I,  241 
Checks,  I,  247;  II,  212,  213 

Form,  II,  213 
Folder,  I,  241 

Form,  I,  242 
Journal,  II,  234,  235 

Form,  II,  235 
Journal  entry,  canceling,  I,  246 
Payment  of,  I,  245-247 

Allowances  and  discounts,  I,  246 
Petty  cash,  II,  220,  221 

Form,  II,  220 
Register,  I,  241;  II,  116;  III,  130.  213,  339 
Forms,  I,  244,  245;  II,  117 
Problem,  V,  9 
And    purchase    journal,    distinction    be- 
tween, II,  116,  117 
Forms,  II,  117 
Contractor's,  II,  455-457 

Form,  II,  456 
Hotel,  II,  441 

Form,  II,  441 
Items  entered  on,  II,  118 
Operation  of,  I,  241 
Posting  from,  I,  243 
Purchase  journal  as,  I,  240,  241 
Statement.  II.  121 
System,  I,  240-247;  II.  118-121 

w 

Wages,  I,  113;  H.  304-306;  III,  169,  195-20 

(See  also  "Labor,"  "Pay-roll") 
Bonus  plan,  II,  305;  III,  204 
Day-rate  method,  advantages  of,  III,  195- 

197 
Emerson  system,  II,  306 
Gantt  system.  III,  204 
Halsey  system,  II,  305 
Pay  period,  II,  304 
Payment,  methods  of,  II,  305,  306 
Piece-rate,  II,  305;  III,  197-200 

DiflFerential,  II,  305;  III,  200 

Fixing  rate.  III,  198 
Premium  method,  II,  305;  III,  202 

Graduated,  III,  206 
Rowan  system,  II,  305 


Wagks — Contin  ucd 

Task  and  bonus  system.  III,  204 

Taylor  system,  II,  305 

Time  basis,  II,  305 

Towne  plan,  II,  305 
Waste,  III,  142,  145 

Account,  textile  costs.  III,  368 

Adjustments  on  books.  III,  140 
Control  of.  III,  65 

Preventable,  III,  8 

Stores,  before  used.  III,  150 
Wasting  Assets,  IV,  238,  239 
Problem,  V,  207 

Reserve  for,  IV,  115 
"Wasting"  Enterprises, 

Dividends  may  be  paid  out  of  capital,  when, 
IV,  57,  58 
AVater,  III,  233,  239;  IV,  27  (See  also  gener- 
ally "Fixed  charges") 
Weight    of    Material,    Fluctuations    in, 

m,  144 

Wholesale  Business,  II,  152-154,  268,  3G3- 
372  (See  also  "Trading  business") 
Classification  methods,  II,  268 
Combined  with  retail,  II,  152-154 
Cost  accounting  for  (See  "Cost  accounting 

for  trading  enterprise") 
Sales  book,  II,  171 
Window  Dressing  Expense,  Distribution 

OF,  n,  469 
Withdrawals,  I,  33 

Accounting  covering,  I,  209 
By  proprietor,  I,  114 

Problems,  V,  93,  242 
Closing  accounts,  I,  100,  101 
Directly,  I,  33 
Indirectly,  I,  33 
Partnership,  I,  348,  349 
Wood- Working  Industries,  Scrap,  III,  148 
Woolen  Mill  (See  also  "Textile  costs") 
Expense  accounts,  chart.  III,  212 
Form,  III,  214-216 
Work  in  Process, 
Account,  III,  79,  83 
Entries,  III,  83 
Illustrated,  III,  85,  90 
Journal  entry,  illustrated.  III,  107 
Process  method.  III,  90 
Production-center  system,  illustrated.  III 

324 
Textile  costs.  III,  369-376,  380-389 


GENERAL   INDEX 


190 


Work  in  Process — Continued 

Definition,  III,  23 

Inventory  or  record.  III,  74,  76 

Profit  on,  IV,  36,  37 
Work  Sheet,  Daily,  III,  62 
Working  Capital,  I,  124 
Working  Hours,  Hotels  and  Restaurants, 

II,  435,  536 
Working    Hours    Method,    Depreciation 
Rates,  IV,  172 


WoBKiNo  Oboamixatioii  (Sm  *t>r|»aii«tiaa*^ 
Working  pArnw.  II.  40.  41 

Analysis  paper,  II,  40 

Cross-section  paper.  II.  41 

Legal  cap,  II.  41 


Yabn  MANurACTTJms  (See  **TciUle  eoeU" 


/^ 


ro 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 
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.  i 


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